Can an Iowan Claim a 529 Deduction for Contributions Into Another State’s 529 Plan?
Can a taxpayer claim a deduction in Iowa for contributions made to another state’s 529 plan? The short answer is no.
Are Iowa 529 Deductions Just for Dependents?
The rule is, you can take a deduction on your Iowa return 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.
New Rule for When Deductions Can Be Taken for Contributions to Iowa 529 Plans
Iowa has changed a rule relating to when taxpayers can deduct contributions to College Savings Iowa (Iowa’s Section 529 Plan).
Glossary: College Savings Iowa
College Savings Iowa refers to a tax-advantaged way for Iowa residents to save for college expenses. It’s a type of 529 Plan, where money going into the plan is not tax deductible (for federal taxes) but money coming out not taxed as long as it’s used for qualifying expenses.
Glossary: 529 Plan
The term “529 Plan” is a generic name given to tax-advantaged savings accounts for college expenses.
