Tax Season may not be the most exciting holiday. No fireworks, no barbecues, no exchanging of gifts. But it is a season of opportunity—especially if you’ve got little ones running around the house.
If you’ve already received your tax refund, don’t spend it all in one place! That new slow cooker or those limited-edition sneakers might be tempting, but now is the perfect time to make a contribution to your child’s CollegeCounts 529 account. If you haven’t opened an account yet, this could be the perfect way to kick one off.
If your tax return was underwhelming—or you’re procrastinating on filing your taxes—then it’s time to start thinking ahead.
Investing regularly in your children’s CollegeCounts accounts can yield a number of tax advantages for contributors and account owners. Here are some of the tax benefits to consider when investing with the CollegeCounts 529 Fund.
Alabama Income Tax Deduction
Contributions from parents, grandparents, or any other Alabama taxpayer come with an added bonus in the form of an Alabama state income tax deduction.
Individual filers can deduct up to $5,000 of contributions to CollegeCounts in a calendar year. If you’re a married couple filing jointly (with both spouses contributing), you can deduct up to $10,000 per year from your Alabama taxable income1.
No matter how much you invest, any earnings in your CollegeCounts 529 account will grow free from federal and state income tax. This means the potential for additional investment growth for your account.
Your account’s tax advantages aren’t limited to contributions—when it comes time to withdraw your student’s CollegeCounts 529 dollars for college, you’ll enjoy no federal tax on withdrawals for qualified higher education expenses2.
And don’t forget, these “qualified expenses” include a lot more than just tuition costs. You can also use your CollegeCounts dollars on books, supplies, equipment required for enrollment, computers and computer equipment, fees, even certain room and board expenses (as long as your student is enrolled at least half-time) and more.
If you’ve been putting off opening a CollegeCounts 529 account for your children, or you’ve not been contributing as much as you could be, let this Tax Season be a reminder that CollegeCounts offers a number of tax benefits to investors.
Learn more about the tax advantages that come with a CollegeCounts 529 account and be sure to discuss any questions you have with your tax professional for their advice and guidance.