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?
- Tuition and fees at an eligible higher education institution;
- Cost of room and board incurred while enrolled at or attending, at least part-time, an eligible higher education institution;
- Books, supplies and equipment (including computers) required for enrollment in or attendance at an eligible higher education institution;
What are the limits?
Contributions to a single beneficiary, across all 529 accounts, cannot exceed $540,000
You can contribute up to $17,000 per year ($34,000 for married couples)
What about carryovers?
Subject to restrictions. 529 plan accounts accept only cash contributions, so assets in a Coverdell account must be liquidated first to make the transfer.
What if I don’t use it for education expenses?
Earnings on withdrawals for expenses other than qualified education expenses will be subject to ordinary income tax and, in most cases, a 10% federal penalty
- Edit (three dots)
- Subtractions from income
- Contributions to South Carolina Tuition Prepayment Program