November 28, 2014

December 31st is the deadline to get a 2012 deduction for college savings plan

State Treasurer Michael Fitzgerald is reminding you to take advantage of the state tax deduction for contributing to you kid’s College Savings Iowa account. The deductions are based on the calendar year when you deposit funds to the account.

“Parents and grandparents must get their contributions in by December 31st, or it must be postmarked by December 31st to be able to claim this on your Iowa income tax as a deduction for 2012,” according to Fitzgerald. You can have accounts for each of your children.

“Anyone can put up to $2,975 in for each child. And that’s a whopper of a deduction,” Fitzgerald says, “you know if a typical family with two kids, mom and dad put it in, they can deduct 11-thousand-900 dollars from their Iowa taxes. So it can mean a lot.” Fitzgerald says relatives wanting to help out can donate.

“Most parents raising kids don’t have that kind of money, but a lot of grandparents do, and whatever they put in — if they have 10 grandchildren — they can put money in for each one of them and it adds up,” Fitzgerald says. He says one third of the accounts in the program were started by grandparents.

Fitzgerald says you can start an account with 25 dollars, and that is the minimum you can make with each deposit. “Most people do not put in the max, because putting in 29-hundred and 75 dollars for each child is a little bit steep, a little too challenging for most folks financially. But the average account by the time a child goes to college in Iowa, they’ll have $14,000 saved,” Fitzgerald says.

Investors in the program do not have to be Iowa residents. The child can take out the money for qualified college expenses including tuition, books, supplies and room and board at any eligible college, university, community college or accredited technical training school in the United Sates or abroad.

You can call 1-888-672-9116 to sign up or go to www.collegesavingsiowa.com.