Each year, Illinois taxpayers can deduct contributions made to Illinois 529 plans up to:1
- $10,000 per individual taxpayer
- $20,000 for a married couple filing jointly
The Illinois tax deadline is December 31.
Can I still make a 529 college savings contribution for 2017?
Because it is past December 31, 2017, the answer is no. That was the last day you could open a new Bright Directions account or contribute to an existing account for the 2017 tax year. This is, however, an excellent time to get a jump on 2018.
Illinois Tax Forms: You will report contributions to Bright Directions on your Illinois Department of Revenue 2017 Schedule M (Step 3 – Line 12) for state of Illinois tax deduction purposes.
Please don’t hesitate to contact us at 866.722.7283 if you have questions in determining the amount of your 2017 contributions eligible for the Illinois income tax deduction.
1An individual who files an individual Illinois state income tax return will be able to deduct up to $10,000 per tax year (up to $20,000 for married taxpayers filing a joint Illinois state income tax return) for their total, combined contributions to the Bright Directions College Savings Program, the Bright Start College Savings Program, and College Illinois during that tax year. The $10,000 (individual) and $20,000 (joint) limit on deductions will apply to total contributions made without regard to whether the contributions are made to a single account or more than one account. The amount of any deduction previously taken for Illinois income tax purposes is added back to Illinois taxable income in the event an Account Owner takes a Nonqualified Withdrawal from an Account or if such assets are rolled over to a non-Illinois 529 plan. If Illinois tax rates have increased since the original contribution, the additional tax liability may exceed the tax savings from the deduction.
2The Illinois Administrative Code provides that in the case of a rollover from a non-Illinois qualified tuition program, the amount of the rollover that is treated as a return of the original contribution to the prior qualified tuition program (but not the earnings portion of the rollover) is eligible for the deduction for Illinois individual income tax purposes.
There may be potential adverse tax consequences if the transfer or rollover is not a qualified rollover. Please review all factors with your tax and financial advisor.