The amount you can deduct from your taxes for contributions to the state plan that allows you to save for your kid’s college costs is going up for this year. State Treasurer Michael Fitzgerald’s office oversees the operation of the College Savings Iowa (C.S.I.) program.
Fitzgerald says the Department of Labor determines the annual cost of living increase and this year you will be able to deduct $2,865 per child. That’s up $54. He says you don’t have to put that much into an account and can start an account with $25. A married couple can combine their donations for a total deduction of $11,460 in 2011.
Fitzgerald says the tax advantages are what make the plan better than a regular savings account. He says the contributions can be deducted from you Iowa income taxes, and the money the account earns is not taxed by the state or federal officials. Fitzgerald says C.S.I. offers 13 different investment plans.
Fitzgerald says the investments are mutual funds offered by Vangard, so you can take a safe approach and invest it all in bonds, or be more risky and invest in stocks. Fitzgerald says the money in C.S.I. can be used to pay for many college expenses from tuition and books to room and board. He says the account is flexible enough to allow adults who need to go back to school to use the program.
Fitzgerald says many people now need to change their careers and go back to school, so if they have set up an account for their kids and the kids don’t need the money, they could create an account for themselves and transfer that money to use for their own education. For more information about College Savings Iowa, call 888-672-9116 or visit:www.collegesavingsiowa.com.