All Section 529 plans offer federal tax benefits: the tax-free buildup of investment earnings on money put away for college, and tax-free withdrawals to pay for college expenses.
Iowa's state-sponsored Section 529 plan, College Savings Iowa, adds another benefit for Iowa taxpayers: a deduction on your state tax return. Iowans can deduct up to $2,865 per donor, per donee for 2011 contributions to CSI. For a couple with two children, that adds up to a maximum deduction of $11,460 for 2011.
Parents with a college student already can still benefit; you can get a deduction for deposits this year even if you withdraw them shortly afterwards to pay tuition. And there is no requirement that the plan be used to pay for a school in Iowa.
But time is running low. If you have a CSI plan in place, your payment has to be postmarked, or electronically transmitted, by December 31 to be deductible this year. If you don't have a plan in place, you can find the paperwork here.
Keep checking in for more 2011 year-end tax tips through December 31!
The items included in the Tax Update Blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation.
Joe Kristan writes the Tax Update items, and any opinions expressed or implied are not necessarily shared by anyone else at Roth & Company, P.C. Address questions or comments on Tax Updates to