Don’t Miss The Tax Advantages And The Year-End Deadlines!
It’s the time of year when you’re not only tying bows on presents but also to tying up your end-of-the-year to-do list. As you work to complete all the items before heading into the holidays, don’t forget to look at your CollegeAdvantage 529 plan. Make sure you are taking full advantage of all the tax benefits — including an up to $2,000 deduction from your state taxable income. Your 529 contributions must be received before 4 p.m. ET Friday, Dec. 30, 2016, to be included in this year’s total.
To get started, log in to your account. Review the account balance and the list of contributions made throughout the year, making sure to subtract all gift contributions and any college savings award winnings that may have been added to your 529 plan. This final total should be the amount you alone have contributed to the account in 2016. As an Ohio resident, you can deduct up to $2,000 per person (or married couple) of your 529 plan contributions, per beneficiary, per calendar year, from your state taxable income. However, you can always contribute even more! Contributions over $2,000 per beneficiary, per calendar year, may be carried forward to deduct from future tax years until all of your contributions are fully deducted. Please keep in mind that for the state tax deduction, you will need to have copies of your bank statements or cashed checks to show for verification. Statements from CollegeAdvantage are not acceptable as they contain contributions from all sources, not just the account owner.
Any Ohio resident who made a gift contribution directly to your CollegeAdvantage 529 plan is also allowed to deduct up to $2,000 from their state taxable income as well. The gift giver must keep their own record of contributions for tax purposes.
Additionally, per federal 529 laws, individuals can invest up to $14,000 ($28,000 for married couples) per beneficiary without incurring any federal gift-tax consequences. You can even contribute up to $70,000 per beneficiary in a single year ($140,000 for married couples) and take advantage of five years’ worth of tax-free gifts at one time. For more information, consult your tax adviser or estate-planning attorney.
Online and paper contributions must be received by CollegeAdvantage in good order before 4 p.m. ET Friday, Dec. 30, in order to be recorded as occurring in 2016.
So as you’re wrapping up the gifts and your 2016 to-do list, check that you’re receiving all the tax benefits with each gift of college you contribute to the 529 account.
Posted on December 06, 2016