February 2021: Employer Tax Credit for 529 Plan Contributions
EMPLOYER TAX CREDIT FOR 529 PLAN CONTRIBUTIONS
2021 marks the final year that employers can take advantage of a tax credit for employer 529 contributions. The Working Families College Savings Act, HB18-1217 was signed on May 29, 2018. The act created an income tax credit for tax years 2019 through 2021.
Employers that make contributions to a 529 qualified state tuition program account owned by their employees are allowed a credit on their 2021 income tax return in the amount of 20% of the contribution per employee, not to exceed $500 per employee.
- Earnings in a 529 plan grow federal tax-free and contributions do not have to be reported on your federal return
- You will not be taxed when the funds are used for qualified education expenses, up to the full amount of college tuition and fees, or up to $10,000 per year for private, public, or religious elementary and secondary schools
- For individuals, contributions to a Colorado 529 plan are deductible in computing Colorado taxable income
- Almost anyone can be a beneficiary of a 529 plan, and the 529 account owner remains in control of the account
- Deposits up to $15,000 per individual per year ($30,000 for married filing joint) qualify for the annual gift tax exclusion
- There are no income limits, age limits, or annual contribution limits
2021 Soukup Bush Deadlines
2021 ESTIMATED PAYMENT DEADLINES
APRIL 15, 2021 – 1st quarter estimated payments for 2021 are due to the IRS and Colorado Department of Revenue
JUNE 15, 2021 – 2nd quarter estimated payments for 2021 are due to the IRS and Colorado Department of Revenue
SEPTEMBER 15, 2021 – 3rd quarter estimated payments for 2021 are due to the IRS and Colorado Department of Revenue