Tax Credit FAQ
Q. Am I eligible for Indiana’s CollegeChoice 529 Investment Plan tax Credit?
A. You may be eligible for a 20% state tax credit, up to a maximum of $1,000, for
contributions to Indiana’s CollegeChoice 529 Investment Plan. While there are many
529 college savings plans available both in Indiana and nation-wide, only
contributions made to this specific CollegeChoice 529 Investment Plan are eligible
for this credit.
Please note that, effective January 1, 2010, the Indiana state income tax credit will no longer apply to rollovers from another state's qualified tuition program or to transfers from the Upromise service into a CollegeChoice 529 account. All other contributions will continue to be eligible for the tax credit to the extent previously allowable
For more information about this credit, see Income Tax Information Bulletin #98 at
http://www.in.gov/dor/reference/files/ib98.pdf
Q. How do I claim the tax credit?
A. The tax credit is entered on the individual income tax return (Form IT-40), under Indiana credits, line 31. Instruction are provided in the IT-40 Booklet on page 33 and are available on-line a http://www.in.gov/dor/3910.htm.
Q. Are there additional forms required to claim the tax credit?
A. Yes. There are 2 forms required to claim the tax credit: IN-529 and Schedule 2.
Outlined in the IT-40 Booklet, page 33, Schedule IN-529 and Schedule 2 must be attached when claiming the credit. The form is available at:
http://www.in.gov/dor/files/08-in529.pdf
Q. Can I claim the credit if I am a non-resident with Indiana taxable income?
A. Yes. The credit is limited to the lesser of 20% of contributions or $1,000 on the tax liability of the taxpayer. From IT-40 PNR must be completed by a nonresident or part year resident to claim the tax credit.
Q. Does line 21 of the Form IT-40, under Recapture of Indiana’s CollegeChoice 529
credit need to be completed?
A. This line is completed if you have an amount of previously claimed tax credit to
be recaptured.
If you claimed a tax credit and made a non-qualified withdrawal (s) from this plan,
you will probably have to repay some or all of any credits previously claimed.
Withdrawals made for higher education expenses tend to be qualified withdrawals.
Other withdrawals may fall under the category of ‘non qualified.’ For more
information about withdrawals, contact the Department for Income Tax Information
Bulletin #98 at: http://www.in.gov/dor/reference/files/ib98.pdf See Schedule IN-529R http://www.in.gov/dor/files/08-in529r.pdf to figure any amount to be recaptured.
For the 2007 tax credit, contributions must have been completed and processed by 12/31/07. Any contributions that were not processed by that date are not eligible for the 2007 credit. Going forward for 2008 and beyond, all contributions have to be “postmarked” by 12/31, not processed by 12/31.
*Please consult your financial or tax professional to learn how state based tax benefits would apply to your specific circumstances*
