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529 Tips

Tax Time Reminders

529 ​Plans offer a variety of tax benefits to help and encourage the entire family to save for future college expenses. Below are a few things to consider as you either prepare your 2015 tax return or look ahead for tax advantages for 2016.

Annual Tax Documents

Account owners who made a withdrawal from your Direct Plan account(s) during calendar year 2015, will receive a federal form 1099-Q, either in the U.S. mail or electronically, depending on the preferences you set up in your account. This form will report the total distributions, earnings, and basis for tax reporting purposes. As always, please consult your tax advisor to discuss the treatment of your 529 account for your individual tax situation. Forms are available online now. If you’ve requested paper copies of your forms, they were mailed on January 22, 2016.If you also own accounts in the CollegeAdvantage Guaranteed 529 Plan and/or the BlackRock CollegeAdvantage Advisor 529 Plan, you will be mailed separate forms from those accounts if you made withdrawals.

$2,000 is Not a Cap

If you are an Ohio taxpayer, contributions to CollegeAdvantage may be deducted from your Ohio taxable income in any amount up to $2,000 per year, per beneficiary, with unlimited carry forward. This means that $2,000 per year is not a contribution cap.  Should you choose to contribute more than $2,000 in a calendar year, any amounts above $2,000 may be deducted in future years, in increments up to $2,000 per year, until all contributions have been deducted. Non-account owners who are Ohio taxpayers who make gift contributions directly to a CollegeAdvantage account also qualify for this deduction.

Contribution Records for Tax Purposes

Your annual account contributions summary can be viewed online and is also provided on quarterly account statements. Please be aware, the annual contribution summary shown online and provided in the statement includes contributions you have received from other sources, such as gift contributions from grandparents, family, and friends. When adding up your eligible contributions to claim your Ohio tax deduction, be sure to exclude gift contributions from others and any college savings awards that you might have won. Also, when claiming the Ohio tax deduction, please be sure to refer to your bank records or cancelled checks in addition to your CollegeAdvantage statement(s) and online records.

Ohio taxpayers who gave gift contributions are eligible for the Ohio tax deduction, too, even if they are not the account owner. They just have to keep their own records of gift contributions paid directly to a CollegeAdvantage account (do not pay to a child or parent, contribute directly to the account to receive the tax deduction and save your cancelled checks or other records).

Tax Time is a Good Time to Plan

Tax season is a good time to plan ahead for all of your financial goals for the rest of the year. Be sure to log in to your Direct Plan account today to confirm your account balance and 2015 contributions. While you’re doing that, you can also utilize some of our tools to help in setting or adjusting your college savings goals. Whether you’re curious about how much you’ll need to save or you want to double-check your risk tolerance, use our tools today to gain further insights for investing. (And, if you’ve made it this far and don’t have a CollegeAdvantage account, we’ve got a tool to help see how much it costs if you wait to start saving for college!)

Now’s the time to set your college savings goals, assess your progress, and plan your savings strategy for 2016!

Posted on April 5, 2016

Ohio Tuition Trust Authority

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