The end of the year is here again, and that means it’s time to finalize contributions to your 529 accounts before ringing in 2021.
For Virginia taxpayers, maximizing contributions also means maximizing tax benefits. Virginia residents can deduct contributions up to $4,000 per account, per year, on their Virginia individual income tax returns. Also, Virginians age 70 and above may deduct the entire amount contributed to a Virginia529 account in one year. See more information about tax advantages of Virginia529 here.
The amount of your 529 plan state income tax benefit depends on where you live and how much you contribute to a 529 plan during a given tax year. While most states limit state tax deductions to contributions made to their own state’s 529 plan, Arizona, Kansas, Maine, Missouri, Montana and Pennsylvania normally allow taxpayers to deduct contributions to any 529 account for qualified college expenses.
If you pay income taxes to one of these states, consult a tax professional for more information about deducting contributions to a Virginia529 account.
Take a look at Virginia529’s holiday schedule for processing deadlines to ensure your contributions are made in time to qualify for a 2020 tax deduction. Please note that until further notice, Virginia529's office building will remain closed due to COVID-19. Virginia529 will process your investment direction or withdrawal request received in good standing according to this year’s schedule. This calendar is also useful if you’re planning a withdrawal from your account this month.
While you may be focused on the holidays, don’t let the season go by and leave money on the table!