Summer Savings Strategies Start With Ohio’s Sales Tax Holiday
The Summer of 2021 is the perfect time to open an Ohio 529 college saving account or to review your existing Ohio 529 saving strategies before the new school year starts. Ohio’s 529 Plan, CollegeAdvantage, offers online calculators and tools with which you can help you stay on track for your college savings goals. You can even use the College Saving Planner to see what would happen if you increased your 529 contributions. We’re sharing some ideas and steps you can take this summer to further fund your 529 account.
Save with Ohio’s Sales Tax Holiday
Does your child’s upcoming school year supply list seem to go on and on? The State of Ohio wants to help with a sales tax holiday weekend. During this weekend, take advantage of the back-to-school sales. You can then deposit those extra savings into your child’s 529 plan to continue supporting their future higher education.
Ohio’s 2021 sales tax holiday weekend starts at 12 a.m. Friday, Aug. 6, and ends at 11:59 p.m. Sunday, Aug. 8. School supplies priced at $20 per item or less; school instructional material at $20 per item or less; and clothing priced at $75 per item or less are all exempt from sales and use tax.
According to the Ohio Department of Taxation, school instructional materials are reference books, reference maps and globes, textbooks and workbooks. The following items are considered school supplies: Binders; book bags; calculators; cellophane tape; blackboard chalk; compasses; composition books; crayons; erasers; folders (expandable, pocket, plastic, and manila); glue, paste, and paste sticks; highlighters; index cards; index card boxes; legal pads; lunch boxes; markers; notebooks; paper; loose leaf ruled notebook paper, copy paper, graph paper, tracing paper, manila paper, colored paper, poster board, and construction paper; pencil boxes and other school supply boxes; pencil sharpeners; pencils; pens; protractors; rulers; scissors; and writing tablets.
School supplies does not include any item purchased for use in a trade or business.
If you have any additional questions about the sales tax holiday, the Ohio Department of Taxation has answers on their FAQ page.
Save with disappearing expenses
Since you’ve taken advantage of Ohio’s sales tax holiday, would you like more ideas to build the savings in your 529? Then let’s start with saving your disappearing expenses.
Disappearing expenses are costs that are temporarily part of your family’s budget. For instance, a large disappearing expense for most families is preschool. Once your child starts all-day kindergarten or first grade, you can turn the former preschool, day care, or summer camp costs into regular contributions to your 529 college savings account. This way, you can continue to support your child’s educational needs far into the future.
Other disappearing expenses can include car loans, medical or dental bills, credit card debt, or, perhaps more relevantly, your own student loan payments. Once you have paid off these obligations, re-direct those dollars from your budget to your child’s 529 plan. As these costs are already in your household’s budget, there is no loss of income with changing them into 529 contributions.
Save with automatic contributions
A simple and easy way to build up your 529 savings is through automatic recurring contributions. With it, you can pay yourself and your child’s future higher education first, rather than trying to contribute whatever dollar amount is left from your paycheck. Most account owners say it’s easier to set up the automatic contributions and then forget it. You can set these automated deposits according to your paydays or a monthly contribution schedule. Even small contributions to of your 529 account can add up to big savings.
Some employers also offer payroll direct deposit, where a portion of your after-tax paycheck is deposited directly into your CollegeAdvantage Direct 529 account. To learn more about setting up payroll direct deposit, this article will guide you through the simple steps to take. Payroll contributions makes it easy to save regularly to meet college-saving goals.
Save with Upromise
Ohio’s 529 Plan has partnered with Upromise* to help you save for your child’s higher education costs while shopping. Upromise is a free rewards program that offers its members cash back as you shop online, dine out, buy groceries, and book flights and hotels. If you haven’t signed up with Upromise yet, you can receive a $5.29 bonus when you open an account. Additionally, you can earn another $25 in bonus rewards when you link your first account with Ohio Direct 529 Plan, CollegeAdvantage. Once you reach $50 in your Upromise account, you can transfer those funds to your CollegeAdvantage Direct account.
Would you like to see how Upromise can help build your Ohio 529 college savings account? A long-time CollegeAdvantage family shared their Saving Story on how they used Upromise to add to their Ohio 529.
Save with loved ones’ contributions
Family and friends want to commemorate the big events in your child’s life. If they ask for gift ideas, tell them that they can help with a big milestone in your child’s life – their higher education —with a contribution to your child’s 529 plan. With Ugift, it’s simple for anyone to contribute to your CollegeAdvantage Direct 529 Plan account. Log in to your 529 account and click on Ugift to receive a unique code for your account. This code permits others to make online contributions to your 529 plan without needing the actual account number. Once they have the Ugift code, friends and family can visit Ugift529.com to make their electronic contribution securely from their bank account. The gift giver can make one-time or recurring electronic contributions at any time, and if they are an Ohio taxpayer, they can deduct their contributions up to $4,000 from their Ohio taxable income.
It's Never Too Late To Start Saving
If you haven’t started to save for college costs, it’s never too late to open an Ohio’s 529 Plan. Every dollar saved is a dollar that isn’t borrowed. This makes a 529 college savings plan an excellent alternative to student loan debt. Even small 529 plan deposits can grow through the power of compound interests, tax-free earning, and tax-free withdrawals for qualified higher education expenses. If you have been saving in a 529 plan, take these additional steps and watch how your account grows!
Ohio’s tax-free 529 Plan can be used nationwide for whatever comes after high school, including federally accredited apprenticeships, trade and specialty schools, community colleges, certificate programs, four-year universities and colleges, graduate school, law school, and medical school.
Visit Ohio’s 529 Plan online to start saving today for your child’s future education. An investment in a 529 plan is an investment in your child where every dollar saved today is a dollar that doesn’t have to be borrowed later. A 529 account can be used for whatever comes after high school. Learn, plan and start with Ohio’s 529 Plan today at CollegeAdvantage.com.
This article was originally posted in July 2020 and has been updated to reflect new information for 2021.
* Upromise is an optional program offered by Upromise, LLC, is separate from the Ohio's 529 Plan, CollegeAdvantage, and is not affiliated with the Ohio's 529 Plan. Separate terms and conditions apply to the Upromise program, and you will be required to read and agree to them at sign-up. Participating companies, contribution levels, and terms and conditions are subject to change at any time without notice. Transfers from Upromise to an Ohio's 529 Plan, CollegeAdvantage account are subject to a $50 minimum.
Upromise and the Upromise logo are registered service marks of Upromise, LLC.
Posted on July 26, 2021