Each year, Alabama taxpayers can deduct contributions made to CollegeCounts up to:1
- $5,000 single filers
- $10,000 married, filing jointly when both spouses contribute
The Alabama tax deadline is December 31.
What is the deadline to contribute to take advantage of the Alabama state income tax deduction?
Contributions may be completed online or mailed. Contributions that are mailed must be postmarked to CollegeCounts no later than December 31, 2020 to be eligible for a 2020 deduction. Electronic contributions must be completed by 11:59pm Central Time on December 31 to be considered a 2020 contribution.
Any contribution made after 3:00pm Central Time on Thursday, December 31 but before 11:59pm Central Time on December 31 will post to your account on January 4, 2021, but will be coded a “Prior Year Contribution” and generally should be eligible for the 2020 state income tax deduction.
Contributions addressed to CollegeCounts and postmarked in 2020 but received in 2021, will be invested on the day the check is received – will be coded as a “Prior Year Contribution” and will be considered a 2020 contribution for tax deduction purposes.
2020 Contributions for Alabama state income tax purposes: 2020 contribution information is included on your December 31, 2020 account statement (located below the pie chart on your statement). Contributions are reported on a cash basis so if you made any contributions online at the end of December 2020 or by mail with a late December 2020 postmark you will want to see if they were included in the transaction activity on your December 31st statement or if we received them and posted them in January 2021 as a “Prior Year” contribution. A 2020 postmarked contribution invested in January 2021 as a “Prior Year” contribution should be eligible for the 2020 Alabama tax deduction. Likewise, make sure to review your 1st quarter 2020 account statement for any “Prior Year” contributions for 2019 that you would need to adjust for.
PLEASE REVIEW to your records to match your total contributions. The year‑to‑date contribution amount we report will also include contributions to your account by others (those generally would be deductible by the contributor versus you).
1Individuals who file an Alabama state income tax return are eligible to deduct for Alabama state income tax purposes up to $5,000 per tax year ($10,000 for married taxpayers filing jointly if both actually contribute) for total combined contributions to the Plan and other State of Alabama 529 programs. The contributions made to such qualifying plans are deductible on the tax return of the contributing taxpayer for the tax year in which the contributions are made. In the event of a Nonqualified Withdrawal from the Plan, for Alabama state income tax purposes, an amount must be added back to the income of the contributing taxpayer in an amount of the Nonqualified Withdrawal plus ten (10%) percent of such amount withdrawn. Such amount will be added back to the income of the contributing taxpayer in the tax year that the Nonqualified Withdrawal was distributed. Please consult with your tax professional.