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 Arizona 529 plan?
Arizona offers two direct-sold 529 college savings plans that are designed to encourage individuals to save for future education expenses.
This provides a State of Arizona income tax deduction for contributions made to 529 plan
What are the qualifications?
The plan is designed to pay for qualified expenses for fees, books, supplies, and equipment required for participation in an apprenticeship program
Also, qualified student loan repayments, up to a lifetime maximum of $10,000 per beneficiary.
This includes two-year and four-year public or private colleges, universities, community colleges, or technical training schools. To be eligible the student must attend a college, university or vocational program accredited by an agency that is recognized by the U.S. Department of Education.
What are the limits?
For single filers : $2,000/yr
For joint filers : $4,000/yr
What about rollovers?
An account may be “rolled over” or transferred to another account within a financial institution in Arizona’s Education Savings Plan or to another provider in the AESP (without penalty) once per calendar year. However, this must be a transfer or “rollover” not a withdrawal, or it will be deemed an unqualified withdrawal and be subject to penalties and taxes. You can also “rollover” your account to another state’s plan if so desired.
What if I don’t use it for education expenses?
If the money is withdrawn and not used for qualified higher education expenses, investment earnings will become subject to federal and state income tax, and a federal 10 percent penalty will be imposed.
You can deduct contributions made to these plans by doing the following:
- State Section - Edit
- Subtractions from Income
- Contributions to 529 College Savings plan