Wisconsin 529 College Savings Plan Tax Updates:
Wisconsin residents can still reduce their 2018 state-taxable income, dollar-for-dollar, up to $3,200 per beneficiary by contributing to a Wisconsin 529 College Savings Plan. You do not need to be an immediate family member to qualify for the tax benefits but must be 18 or older. The two Wisconsin plans offered are the direct-sold Edvest and advisor-sold Tomorrow’s Scholar. The deadline for making prior-year 2018 contributions is the earlier of 4/15/2019 or the date you file your taxes. The 2019 state tax deductible contribution amount has increased to $3,280. This number is subject to an inflation adjustment annually.
It is important to remember, contributions that exceed the annual state deductible amount can be carried forward to future tax years. So don’t fret if you exceeded the tax deductible amount in a given year. (Wisconsin 529 accounts are allowed a $488,000 maximum per beneficiary.) Incoming rollovers from other states’ 529 plans to a Wisconsin plan may reduce your Wisconsin taxable income too, based on the amount of contributions you made to the original plan (excluding growth in the account) and rollover tax-deductible amounts are also eligible for the carry forward previously described.
If you made a 2018 529 College Savings contribution remember to include this in your Wisconsin tax return or share with your accountant. If you made a 529 distribution you will receive a 1099-Q tax form from Edvest or Tomorrow’s scholar to document whether it is a Qualified Education Expense. Wisconsin has confirmed it will mirror federal rules for state tax purposes. Allowable expenses for higher education include: tuition, books, software, computers and related technology, room and board, and some other fees. Allowable expenses for elementary and secondary schools include tuition only (up to $10,000 per beneficiary each year).
For more information on 529 College Savings plans contact your Crescendo Financial Planner or Advisor or email us at info@crescendowm.com.
Brooke Napiwocki, CFP®, MBA
Financial Planner
C R E S C E N D O Wealth Management, LLC
Source: 529.wi.gov; January 8, 2019
The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing. The information provided is not intended to be a substitute for specific individualized tax planning or legal advice. We suggest that you consult with a qualified tax or legal advisor.
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