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Year-end tax tip for Iowans: fund your College Savings Iowa plan

December 22, 2011

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!

Tags: 2011 year-end tax tips.College Savings Iowa.Section 529 plans.