Ohio 529 Tax Deduction 2024: A Comprehensive Overview for Savvy Ohioans

Ohio's 529 College Savings Program offers a generous tax deduction to state residents who invest in their child's higher education future. This valuable tax break can significantly reduce your state income tax liability, making it a worthwhile consideration for Ohio families.

Tax Deduction Details for 2024

For 2024, Ohio residents can deduct up to $4,000 per year from their state income tax for contributions made to an Ohio 529 plan. This deduction is available for both married couples filing jointly and single filers.

The deduction is available for contributions made to any Ohio 529 plan, including:

• CollegeAdvantage Direct Savings Plan
• CollegeAdvantage Advisor 529 Plan
• CollegeAdvantage Ohio Tuition Plan

Eligibility Requirements

To qualify for the Ohio 529 tax deduction, you must meet the following eligibility requirements:

• You must be a resident of Ohio for the entire year.
• The funds must be contributed to an Ohio 529 plan in your name or the name of your child or other designated beneficiary.
• The funds must not be withdrawn within two calendar years of the contribution.

Benefits of the Ohio 529 Tax Deduction

1. Tax Savings:

The Ohio 529 tax deduction can provide significant tax savings for eligible Ohio residents. For instance, if you contribute the maximum $4,000 to an Ohio 529 plan and have a marginal tax rate of 5%, you could save up to $200 on your state income taxes.

2. Encouragement for College Savings:

The tax deduction incentivizes Ohioans to invest in their children's higher education. By offering a tax break, the state encourages parents and grandparents to prioritize college savings, making it more feasible to meet future educational costs.

3. Supplement to Other Tax Savings Options:

The Ohio 529 tax deduction can complement other tax-advantaged savings options, such as the federal income tax exemption for qualified withdrawals from 529 plans. By utilizing multiple tax-saving strategies, you can maximize the growth potential of your college savings.

How to Claim the Deduction

To claim the Ohio 529 tax deduction, you will need to:

1. Make a qualifying contribution to an Ohio 529 plan.
2. Complete the Ohio Form IT 1040 and attach Schedule CT, which allows you to claim the deduction.

Common Mistakes to Avoid

To avoid common mistakes that could jeopardize your eligibility for the Ohio 529 tax deduction, consider the following:

• Timely Contributions: Ensure that you make your contributions to the Ohio 529 plan before the April 15th tax filing deadline (or October 15th with an extension).
• Two-Year Holding Period: Withdrawals made within two calendar years of the contribution date may disqualify you from the tax deduction.
• Incorrect Filing: Pay attention to the instructions on Schedule CT and ensure that you calculate and claim the deduction accurately.

Conclusion

Ohio's 529 College Savings Program offers a valuable tax deduction for state residents who prioritize their children's higher education. By taking advantage of this tax break, Ohioans can significantly reduce their state income tax liability and lay a solid financial foundation for their children's future. Remember to consult with a qualified tax advisor or financial professional for personalized guidance on your Ohio 529 tax deduction strategy.

Additional Considerations for Ohio 529 Tax Deduction

1. Ohio's College Savings Goal:

Ohio's ambitious "College Savings Goal" aims to increase the number of Ohioans who attend and graduate from college. The Ohio 529 tax deduction plays a crucial role in achieving this goal by making college savings more accessible and affordable.

2. Types of Ohio 529 Plans:

Each Ohio 529 plan offers unique features and investment options. Consider your investment style, risk tolerance, and child's age when choosing a plan.

• CollegeAdvantage Direct Savings Plan: Provides low-cost investment options and flexibility in choosing investments.
• CollegeAdvantage Advisor 529 Plan: Offers professional investment management services for a fee.
• CollegeAdvantage Ohio Tuition Plan: Locks in future tuition costs at today's rates, ensuring college affordability.

3. Impact on Financial Aid Eligibility:

While Ohio 529 contributions are not considered income for federal financial aid purposes, they may affect your child's eligibility for some state-based financial aid programs. It is important to research the impact of Ohio 529 contributions on financial aid before making large contributions.

FAQs about Ohio 529 Tax Deduction

Q: Can I claim the Ohio 529 tax deduction if I am a non-resident of Ohio?

A: No, only Ohio residents are eligible to claim the Ohio 529 tax deduction.

Q: Can I use the Ohio 529 tax deduction to fund other college expenses besides tuition?

A: Yes, you can use the Ohio 529 tax deduction to fund eligible college expenses such as room and board, books, and supplies.

Q: What are the investment options available in Ohio 529 plans?

A: Ohio 529 plans offer a range of investment options, including age-based portfolios, target-date funds, and individual securities.

Q: Is there an annual maximum contribution limit to Ohio 529 plans?

A: There is no annual maximum contribution limit to Ohio 529 plans, but the state tax deduction is capped at $4,000 per year.

Conclusion

Ohio's 529 College Savings Program provides a unique opportunity for Ohio residents to save for their children's higher education while enjoying significant tax savings. By taking advantage of the Ohio 529 tax deduction, Ohioans can create a brighter financial future for their children and support the state's goal of increasing college attainment.