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SAVING FOR COLLEGE? DON'T FORGET TO DEDUCT YOUR 2007 COLLEGE SAVINGS IOWA CONTRIBUTIONS

April 05, 2008

Iowa has a pretty good state-sponsored Section 529 plan, College Savings Iowa. It uses low-fee Vanguard Funds and has a reasonable range of investment choices. It also has one factor that clinches the deal for many Iowa taxpayers: you can get a deduction for CSI deductions on your Iowa 1040. For an Iowa top-bracket taxpayer, this is like a 6% negative load on the investment.

For 2007 you may deduct up to $2,595 per donor, per donee, in contributions made during 2007 to CSI. That means a couple with two children could deduct up to $10,380 in CSI 2007 contributions. This number goes to $2,685 for 2008. You can, of course, make additional contributions over the deductible amount subject to the normal limits for contributions for Section 529 plans.

You take the deduction on Iowa 1040 line 24.

This is today's installment of our daily series of 2008 filing season tips -- a new one daily through April 15.

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