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 529 plan?
A 529 plan is a tax-advantaged savings plan designed to save for qualified higher education expenses including tuition, room and board. 529 refers to Section 529 of the Internal Revenue Code.
What are the qualifications?
According to the MACS Disclosure Booklet, account holders can withdraw funds for the following expenses:
"(i) fees, books, supplies and equipment required for the participation of a Beneficiary in a Registered Apprenticeship Program
(ii) up to $10,000 per year of tuition in connection with enrollment or attendance at an elementary or secondary public, private or religious school as determined under applicable state law
(iii) up to $10,000 in amounts paid as principal or interest on any Qualified Education Loan of the Beneficiary or a Sibling of the Beneficiary."
What are the limits?
$10,000 for a single return
$20,000 for a joint return
What about carryovers?
Rollovers made from a Section 529 Plan to a Qualified ABLE Program after December 31, 2025, shall be subject to federal tax unless the provision is extended by an Act of the U.S. Congress signed by the President of the United States.
What if I don’t use it for education expenses?
If you make a non-qualified withdrawal, however, the earnings portion will be taxable to a resident recipient, and the contribution portion that was previously deducted will be included in the resident recipient’s Mississippi gross income. Non-qualified withdrawals may be subject to federal and state taxes and a 10% federal tax.
Where to enter?
- State Section
- Subtractions from income
- Enter Affordable College Savings (MACS) contributions