See How Much Your Tax Refund Can Build Your 529 Plan
Your federal tax refund can make a great contribution to your CollegeAdvantage account. It’s also a smart and easy saving strategy. The average 2016 federal tax refund was $2,697. By adding $2,700 a year to your Ohio 529 Plan over 18 years, you could cover over 40% of college at an Ohio four-year public university.
College Savings Planner Tool
Would you like to run the numbers with your federal tax refund? Ohio’s 529 Savings Program offers a college savings planner to calculate how much you can save by contributing your tax refund every year. Additionally, you can use the tool to see what your estimated 529 account total could be if you deposited monthly automatic contributions, as well as increased the dollar amount or the frequency of 529 contributions. Every amount contributed, whether big or small, can help you reach your savings goal.
529 Plan Tax Advantages
Keep in mind, if you deposit your tax refund or other contributions into your CollegeAdvantage 529 plan, there are many tax benefits.
First, all earnings in a 529 plan are tax-free, so all investment growth is yours to cover college costs.
Second, 529 plan withdrawals to cover qualified higher education expenses are tax-free at federally accredited programs. These expenditures include tuition; room and board (on and off campus) when the beneficiary is enrolled at least half-time; mandatory fees; computer equipment and related technology as well as internet services; books, supplies and equipment related to enrollment and classes; and certain expenses for a special-needs student.
Third, Ohio residents who contribute to Ohio’s 529 Plan, CollegeAdvantage, can deduct their contributions from their taxable state income. Effective Jan. 1, the deduction amount is $4,000 per year, per beneficiary, with unlimited carry forward. Remember $4,000 is not a contribution cap. If an Ohio taxpayer contributes more than $4,000 in one year, they can continue to subtract $4,000 per year, per beneficiary, from their State of Ohio taxable income until all the 529 contributions are deducted.
Setting Savings Strategies
The tax season is also an excellent time to assess your progress on your college savings goals or set your college savings goals! CollegeAdvantage offers tools to help you build a 529 plan that best fits your family’s needs. You can determine your college savings goal or see the cost of waiting to save.
Also, review your investment strategies based on your child’s life stage. If your child just started kindergarten, you have more time to benefit from the power of compound interest. If your child is in middle or high school, you may want to accelerate your savings. Even if your child is in college, you can still take advantage of tax-free earnings (which helps you save even more) and you can maximize the Ohio tax deduction, too.
Ready to open an account with Ohio’s 529 plan? Visit CollegeAdvantage online to save for future college expenses today. Every dollar saved today is a dollar that doesn’t have to be borrowed which makes Ohio’s 529 college savings plan an excellent alternative to student loan debt. CollegeAdvantage is your plan, your way.
Posted on February 21, 2018