The deduction for the College Savings Iowa plan is going up this year. State Treasurer Michael Fitzgerald says the annual state tax deduction amount has been raised to $3,045 for each account. Fitzgerald says there are a lot of options for running the account, depending on the age of your child.
“If parents are real conservative, real cautious — or the child is going to go to school next year — you’ll probably want to put it in a bond fund. That’s your choice, you have 13 choices,” he explains. “And if your child is young, you might want to have it in a complete stock fund. Or you can pick what most people do, and that’s a lifestyle fund. which is, when the child is young it’s more aggressively invested and is just naturally more conservative by the time the child goes to college.”
You get a deduction on your state taxes for the contributions you make during the year. You can have a fund for more than one child, so a family with two kids could deduct up to $12,180 dollars with the maximum invested each year.
Fitzgerald says you can go to www.collegesavingsiowa.com and you can set it up right on-line or you can call 888-672-9116. “It takes about three minutes to set up, it’s very simple,” according to Fitzgerald. Those who already have accounts set up will soon see statements for 2012.
Fitzgerald says you will get an official statement from College Savings Iowa and you can deduct that amount right from your income tax. You can start an account with a minimum of 25 dollars. You do not need to be a state resident to invest and students can withdraw their investment tax-free to pay for qualified higher education expenses including tuition, books, supplies and room and board at any eligible college, university, community college or accredited technical training school in the United States or abroad.