Massachusetts provides a state income tax deduction based on contributions up to $2,000 per year for taxpayers who file tax returns as married filing jointly, and half that for single filers.
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?
Savings can be used for an undergraduate or graduate program at any college or university that is eligible to participate in a student aid program administered by the U.S. Dept of Education.
Earnings are not taxed as they accumulate, and withdrawals are tax-free when used for qualified education expenses, which include tuition, required fees, books, room, board (for students attending at least part time), and required supplies and equipment at a college or university, and tuition only at a K-12 institution.
What are the limits?
Up to $10,000 per year can be applied toward tuition expenses for elementary, middle, and high schools (private, public, or religious).
Massachusetts residents saving in the U.Fund can claim a MA state income tax deduction of up to $1,000 for single filers and up to $2,000 for married persons filing jointly. Note your deduction on Schedule Y (the income modifications/deductions section on most tax software)
What about carryovers?
Individual 529 education savings plan accounts can be transferred from one beneficiary to another eligible member of the family or rolled over into other 529 accounts for the same beneficiary or an eligible family member.
What if I don’t use it for education expenses?
Although the money may come from multiple 529 college savings plan accounts, it will be aggregated on a per-beneficiary basis, and any distribution amount in excess of $10,000 will be subject to income and a 10% federal penalty tax. Learn about spending your 529 funds here.
- Massachusetts Return
- Prepaid Tuition