If you contributed 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 529 plan?
Its main purpose is to help families contend with the future high costs of their children’s or grandchildren’s college or vocational education.
What are the qualifications?
Savings can be used for any qualified tuition expenses. Additionally, savings can be used at accredited colleges and certain vocational schools for qualified expenses which can include mandatory fees, supplies, books or other required equipment, and room and board, if the beneficiary is enrolled at least half-time. Savings can also be used for certain certified apprenticeship expenses.
What are the limits?
- $75,000 for an individual.
- $150,000 if a married couple.
What about carryovers?
The federal tax law allows rollovers from a 529 savings plan account to an account in a 529A "ABLE" savings plan for the same beneficiary or a "member of the family" of the same beneficiary.
What if I don’t use it for education expenses?
Federal income tax, a 10% federal tax penalty, and state income tax and penalties may apply to nonqualified withdrawals of earnings.
Where to enter?
- State Section
- Subtractions from Income
- NJ Best deduction