If you made a contribution to the 529 plan, you will be able to claim a subtraction from income. If you withdrew money from your 529 plan, you may have to add the withdrawal back to your income if it was not used for educational purposes.
What is the Illinois 529 plan?
A 529 college savings plan is a qualified tuition program, sponsored by a state or state agency, designed to allow families a tax- advantaged way to save for college.
Federal law, but not Illinois law, permits an aggregate of up to $10,000 during a taxable year from all 529 qualified tuition programs for a Beneficiary to be used for tuition or connection with the Beneficiary’s enrollment or attendance at an elementary or secondary public, private or religious school.
What are the qualifications?
To be qualified, some of the expenses must be required by the school and some must be incurred by students who are enrolled at least half-time, defined later.
- Tuition and fees. Books, supplies, and equipment.
- Expenses for special needs services needed by a special needs beneficiary must be incurred in connection with enrollment or attendance at an eligible post-secondary school.
- Expenses for room and board must be incurred by students who are enrolled at least half-time (defined below).The expense for room and board qualifies only to the extent that it isn’t more than the greater of the following two amounts.
What are the limits?
- For single filers: $10,000/yr
- For joint filers: $20,000/yr
What about carryovers?
The Illinois Administrative Code provides that in the case of a rollover from a non-Illinois qualified tuition program, the amount of the rollover that is treated as a return of the original contribution to the prior qualified tuition program (but not the earnings portion of the rollover) is eligible for the deduction for Illinois individual income tax purposes
What if I don’t use it for education expenses?
The earnings portion of a nonqualified withdrawal may be subject to federal and state income taxes, a 10 percent federal tax penalty, and Illinois may recapture prior tax deduction benefits. Please consult your tax advisor.
Where to Enter?
- State Section
- Additions and subtractions to income on Schedule M
- Schedule M, Other subtractions
- Distributions from “Bright Start,” “College Illinois,” and “Bright Directions” college savings plans
For more information: