Can a parent contribute to a 529 plan and claim a tax deduction?
Can a parent contribute to a 529 plan and claim a tax deduction?
529 plan gifts may be deductible on state income tax returns. According to a recent study from Fidelity, 84% of parents would welcome a gift of college savings in place of traditional gifts. As an added bonus, the gift giver may qualify for a state income tax deduction or credit based on the 529 plan contributions.
How much can you write off 529?
You'll enjoy a deduction of up to $10,000 per year ($20,000 if married and filing jointly) and you pay no state income tax on earnings and withdrawals that are used for qualified college expenses1. You can also deduct the contribution portion (but not earnings) of rollovers from other state 529 plans.
Who can deduct contributions to a 529 plan?
Who is eligible for a 529 plan state income tax benefit? States typically offer state income tax benefits to any taxpayer who contributes to a 529 plan, including grandparents or other loved ones who give the gift of college.3 Mar 2021
Are 529 plans tax deductible for parents?
Never are 529 contributions tax deductible on the federal level. Earnings from 529 plans are not subject to federal tax and generally not subject to state tax when used for qualified education expenses such as tuition, fees, books, as well as room and board.
Can family members contribute to 529?
Anyone can contribute to a 529 plan account and name anyone as a beneficiary. Parents, grandparents, aunts, uncles, stepparents, spouses, and friends are all allowed to contribute on behalf of a beneficiary.