Important news for account owners, Wisconsin residents, and tax preparers:
There are changes to our state-sponsored college savings plans (Edvest and Tomorrow's Scholar) that became effective in 2014 as part of Wisconsin 2013 Act 227. A new schedule may be required when filing your Wisconsin tax return. Here is a brief summary:
Contributions to accounts continue to be eligible as a subtraction from state-taxable income, dollar-for-dollar per beneficiary, up to a stated amount. This yearly amount is now indexed to an inflation calculation. Greater amounts contributed during a tax year may now be carried forward for subtractions in the next taxable year and taxable years thereafter.
For the 2014 tax year, the maximum income subtraction amount per beneficiary is $3,050 for single or joint filers, as calculated by the Department of Revenue. (For married filing single or certain divorced persons, the 2014 subtraction limit is $1,520). For the 2015 tax year, those amounts will be $3,100 and $1,550, respectively.
The subtraction benefit is now expanded to include any Wisconsin adult, and is no longer limited to immediate family members. You do not need to be the account owner to make contributions and claim the benefit.
Additionally, the year-end deadline for contributions has been extended to April 15 of the following year. (i.e. Contributions by April 15, 2015, may be used for 2014 tax returns.) We recommend noting the intended tax year on the memo line of your check for your future reference.
NEW: To view contribution, rollover and distribution FAQs for College Savings Accounts at the Wisconsin Department of Revenue website, click here.
FILING 2014 WISCONSIN TAX RETURNS: If you made contributions to an account you own or those owned by another, complete Part I or Part II of new Schedule CS, and file with your Wisconsin Form 1 or 1NPR. You will need to do a separate Schedule CS for each beneficiary receiving contributions from you during the year. If you file the shorter Form 1A or WI-Z, you will not be able to claim the benefit.
If you took a non-qualified distribution (i.e. a withdrawal not for Qualified Higher Education Expenses) or made a rollover from Edvest or Tomorrow's Scholar to another state's 529 college savings plan during the year, complete Part III of the schedule; you may have to adjust your Wisconsin income. Instructions for Schedule CS are here.
Since your particular situation may be affected by circumstances or regulations unknown to you, taxpayers should seek advice from a competent tax advisor.
Does your family have college savings needs?
Edvest and Tomorrow's Scholar can help
Higher education is crucial to helping children achieve their dreams, and planning ahead for those expenses can really help. Edvest and Tomorrow's Scholar, the two savings plans in Wisconsin's 529 College Savings Program, offer an easy and flexible way for families to prepare for these costs.
The program offers valuable benefits
An array of low-cost investment options Choose from portfolios that range from conservative to more aggressive allocations to align with your time frame and investment philosophy. Both passive (indexed) and actively-managed portfolios are available, along with stable value choices. Institutional class investment fees make college savings more affordable.
Flexible contribution amounts Open an account for as little as $25 per month. You control the amounts and frequency of automatic deductions or lump-sum payments. Also enjoy lifetime contribution limits of $330,000 per beneficiary.
Most college costs at thousands of schools are eligible Qualified expenses include tuition, fees, books, room and board, or required expenses at most institutions nationwide--including technical schools, public and private colleges, universities, graduate schools, and also at many locations outside of the U.S.
No age, income, or time limits Any adult can contribute to an account--there are no income level restrictions, or age limitations for owners or beneficiaries. Accounts may also be used for graduate school, continuing education, or classes later in life.
Federal and state tax advantages Earnings in your account grow both federal and state tax-free when used for qualified higher education expenses.
Annual state tax benefit Any person may subtract contributions up to $3,050 per beneficiary from their Wisconsin taxable income for the 2014 tax year, up until April 15, 2015. Amounts in excess may be carried forward for use in future tax years. Contributions to accounts with yourself as named beneficiary are also eligible for this benefit.
More information about the Edvest direct-sold plan is available online or by calling 1-888-338-3789. The Tomorrow's Scholar plan is only available through financial advisors and fee-only planners. Both plans are qualified tuition programs under 26 USC 529, offering certain tax benefits, and are administered by the State of Wisconsin. Residents of other states should check to see if 529 plans in their home state offer favorable state tax advantages. The Edvest Facebook, Twitter, YouTube channel, and College Saving Connection blog pages are managed by the State of Wisconsin.