If the end of the year came up too fast and you didn’t put any money in your child’s College Savings Iowa account, you can still do so and get a break when you file your state taxes.
State Treasurer Michael Fitzgerald says the rules that required you to get the contributions to the state program by the end of the year have changed.
“It was a made scramble, December 31st was the cutoff, had to be done by that date. But the legislature changed it just this past year — so now Iowans have the benefit of being able to wait until May 2nd this year when the tax filing deadline ends,” Fitzgerald says. “They can still make a contribution to their College Savings Iowa account and take that off their 2015 taxes.”
You don’t have to have an existing account to take advantage of the tax break. You can open a new account before the May 2nd deadline and deduct whatever you put in on your 2015 taxes.
“It only takes 25 dollars to start a College Savings Iowa account. So, you can put money in and deduct it from your taxes this year,” Fitzgerald says. The maximum tax break for 2015 is $3,163. Fitzgerald says you can double that if both parents have an account for their kids.
“A married couple with two children putting in the maximum amount could put in $12,752 for their children and deduct that from their Iowa taxes this year,” Fitzgerald says. “So, it’s just a phenomenal tax break to help families send these kids to college.” The maximum amount you can deduct is adjust each year based on inflation — so you will be able to deduct a little more from your 2016 taxes.
“Next year it will be $3,188. It’s not much, but inflation hasn’t been much,” Fitzgerald says.
Fitzgerald says you can easily create an account online. “Just log on to CollegeSavingsIowa.com. It’s very simple, just your name, your Social Security number, the child’s name the child’s Social Security number that you are saving for, and you’re in,” according to Fitzgerald. He says you can start an account for a child as soon as they are born and let it build until they are ready for college.
You can withdraw the funds from the account for qualified college expenses, such as 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.