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, fees, room, board, books, equipment and supplies at any eligible educational institution nationwide including colleges, universities, graduate schools and trade schools. Additionally, as a result of the tax bill signed in December 2017, K-12 tuition expenses up to $10,000 per year are also considered qualified expenses for federal tax purposes.
What are the limits?
You can contribute as much as you like to your SMART529 account until the account balance reaches $400,000
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 to Enter?
- State Section
- Subtractions From Income
- Other Subtractions
- Choose VA College Savings Plan Income Distribution from the drop down menu
For more information