Tax Experts
Deductions for 529 Contributions
The federal government doesn't offer a write-off for college-savings plan contributions, but some state governments do.
By Kevin McCormally, Editorial Director, Kiplinger.com
February 26, 2007
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If I put money into a Michigan 529 for our granddaughter's college, is that a tax write-off, and if you gift money to your children, is that also a tax deduction?
Kevin responds;
There is no federal tax deduction for contributions to 529 college savings plans (Uncle Sam's contribution is that earnings can be withdrawn tax free when used for qualifying college expenses). But the state of Michigan does allow state residents to deduct on state returns up to $5,000 ($10,000 on joint returns) of contributions to the Michigan 529 plan.
See 529 Plan FAQs for a list of other states that offer deductions for contributions.
Also, there's no deduction for making gifts to your children. Gifts are deductible only if you are making them to qualifying charitable organizations.
See yesterday's question and answer and our archive.