Iowa allows a deduction for amounts contributed to a Section 529 College Savings Plan. A common question is, who can I contribute money for and still get a deduction?
The rule is, you can take a deduction of up to $3,239 (in 2017) per beneficiary. A beneficiary does NOT have to be your own child. I can be anyone, including yourself, or even someone who’s not related to you.
For more information on Iowa 529 Plans, visit the College Savings Iowa website.
Remember, that deduction of $3,239 is per beneficiary. You can have multiple accounts with multiple beneficiaries, and get a deduction for money put into each account.
Joe has two kids and put the maximum of $3,239 into a 529 Plan for each kid. He also opens an account for his niece and puts the maximum into that account. Joe’s deduction is $3,239 x 3 = $9,717.
If Joe is married, the maximum deduction would be doubled, effectively letting he and his wife deduct up to $19,434 of 529 contributions in total.
Reminder: this deduction is only available on the Iowa tax return; it is NOT available on the federal tax return.
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