answersleft.blogg.se - Irs 529 expenses

Changing the Beneficiary: You can change the beneficiary on a 529 plan to another family member without incurring taxes.

You’ll also owe a 10% tax penalty in most cases.

Taxes on Nonqualified Withdrawals: If you make withdrawals for purposes other than qualified education expenses, you’ll owe income tax on the portion representing your investment gains but not on your contributions.

Prepaid tuition plans are limited to college tuition.

In the case of 529 savings plans, that includes tuition, room and board, and other required expenses. Tax-Free Withdrawals: Any withdrawals you make will be state and federally tax-free if you use them for qualified education expenses.Tax-Deferred Growth: The money in your 529 account will compound and grow tax-deferred, on both state and federal levels, until you withdraw it.No Federal Deductions or Credits: Unlike most states, the federal government provides no income tax deduction or credit for 529 contributions.You can find information about your state’s tax breaks on the College Savings Plans Network website, affiliated with the National Association of State Treasurers.

Nine states-Arizona, Arkansas, Kansas, Maine, Minnesota, Missouri, Montana, Ohio, and Pennsylvania-will even give you a tax break if you invest in another state’s plan. State Credits and Deductions: More than 30 states offer a state tax deduction or credit if you live in that state and contribute to one of its 529 plans.