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. It 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.
Example:
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.