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 Alabama 529 plan?
Alabama offers two 529 plans. Both programs feature a menu of investment options.
Alabama taxpayers can deduct contributions made to their 529 plan or to the Prepaid Affordable College Tuition Program (PACT).
What are the qualifications?
Qualified higher education expenses include: expenses for fees, books, supplies, and equipment required for the participation of a designated beneficiary registered in an apprenticeship program.
The Program recommends that taxpayers seek tax advice from an independent tax professional in regards to their ability to use the 529 program to pay K-12 Tuition Expenses without tax consequences.
What are the limits?
For single filers$5,000/yr
For joint filers$10,000/yr
What about rollovers from other similar state plans?
You can transfer assets from another 529 plan and gain the benefits of the Alabama state income tax deduction. You can only complete a rollover/transfer once in a 12-month period.
What if I don’t use it for education expenses?
Withdrawals for nonqualified expenses may be subject to state and federal taxes as well as an additional 10 percent federal tax penalty.
- State Section-edit
- Adjustments to income
- Enter payments made to Alabama PACT or College Education Savings in 2023