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, room and board, books, computers and fees
- Public and private universities, community college, vocational school, graduate and professional programs (including medical and law schools)
- Any accredited public or private post-secondary school in the U.S. and some schools abroad
- Extra expenses for special needs students including: a classroom aide, wheelchair, special technology and remedial tutoring.
- K-12 tuition or transfer to an ABLE account. When you need to withdraw savings to pay for tuition or other qualified expenses, just fill out a simple form and the payment will be made to the educational institution, account owner or beneficiary as you direct.
What about rollover?
The account owner can roll over funds from one 529 plan to another with certain limitations. Rollovers from your New Mexico plan to another state's plan will be considered a nonqualified contribution and is subject to tax.
What if I don’t use it for education expenses?
Nonqualified distributions must be reported as an addition to income within the state section of the program. You will need to report nonqualified distributions by going to:
- State Section
- Additions to Income
- Contributions Refunded from the NM Education Trust Fund
Where do I enter contributions?
- State Section
- Deductions from Income
- Deductions for contributions to NM Education Trust Account
For more information please visit: NM College savings