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?
A 529 plan is a tax-advantaged savings plan designed to help families (including grandparents) save for future education expenses.
What are the education-related expenses?
Qualified education expenses include tuition, fees, room and board, books, equipment, and supplies at any eligible school across the country—this includes colleges, universities, graduate programs, and trade schools. Additionally, due to a tax law passed in December 2017, up to $10,000 per year in K–12 tuition costs also count as qualified expenses for federal tax purposes.
What are the deduction limits?
Invest529 account owners who are Virginia taxpayers may deduct contributions up to $4,000 per account per year. A contributor age 70 and above may deduct the entire amount contributed to an Invest529 account in one year.
What if I don’t use it for education expenses?
Non-qualified withdrawals are taxable as ordinary income to the extent of earnings and may also be subject to a 10% federal income tax penalty. Such withdrawals may have state income tax implications.
Where can I enter the deduction in the program?
Use the left-side main navigation menu and follow the steps below:
- State
- Virginia
- Deductions
- Other Deductions
- Choose , 'VA College Prepaid Tuition payments & Savings contributions' from the drop-down menu
- Enter the Deduction Amount
- Continue (to save changes)