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Accounting

How does the College Savings Iowa Plan help people plan for education costs?

10/2/2019

ALICIA SHAUL
CPA MBA

The College Savings Iowa Plan is a great tool for people to use in planning for their child’s education costs. The interest, dividends, and capital gains earned on plan funds are tax free income when they are used to pay for qualified education costs. Qualified education costs include: K-12 tuition; college tuition; mandatory fees; books; room and board; required supplies; computers, including related hardware (e.g., printers) and software; and internet access and related services.

In addition to the tax free income on the growth, Iowans also get a $3,387 tax deduction for 2019 contributions on their individual income tax return. This deduction applies to each beneficiary account they own and contribute to. For example, married participants who contribute to separate accounts on behalf of their two children can deduct up to $13,548 (4 x $3,387) in 2019.

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