Posts in Taxes
What is IRS Form 1099-Q?

If you make a withdrawal from an Oregon College Savings Plan account or Coverdell ESA, IRS Form 1099-Q is a tax form that you’ll receive that details all of the withdrawals you made throughout the tax year from your account. It’s important to note that there are different tax implications depending on who was responsible for making these withdrawals.

To ensure that you properly handle matters on your federal income tax return, please consult a tax advisor and learn more about Form 1099-Q from the IRS directly.

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Can you carry forward an Oregon tax deduction on contributions made in the previous tax year?

Yep. You may elect to carry forward a balance over the following four years after a contribution has been made, in order to help distribute your tax deduction potential. For example, if a couple contributed $15,000 to their son’s Oregon College Savings Plan account in 2018, they may subtract a maximum of $4,750 (because they file jointly) on their 2018 taxes. They can then carry forward the remaining $10,250 balance of that contribution for up to four years.

Keep in mind the carried-forward deduction may only be taken if the Oregon College Savings Plan account balance is greater than the deduction amount at the end of the tax year in which the deduction is being made.

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Is there an Oregon income tax deduction?

Yep! If you pay Oregon income tax, contributions made to your account are deductible up to a certain limit (which is adjusted every year to account for inflation). For 2018, individual taxpayers are allowed to deduct $2,375 ($4,750 if filing jointly) for contributions made to any account in the Oregon College Savings Plan, so long as contributions are made prior to filing your state tax return that year.

Note: Recapture provisions apply. This means that if you withdrew funds for non-qualified expenses from your Oregon College Savings Plan account and you claimed a tax benefit for that year’s contribution, the state of Oregon will recapture any Oregon State income tax benefits that you had accrued on the principal portion of that withdrawal. Read through our Plan Disclosure Booklet (PDF) for more info.

Worth noting, any funds that you plan to roll over from another 529 College Savings Plan are considered “new contributions” and will count towards the limit you’re allowed to deduct in a given tax year. It’s best to contact a tax advisor if you’re still unsure about your tax implications might be.

TaxesRachel Diesel
What are the federal estate and gift tax benefits?

The good thing about making gift contributions to an Oregon College Savings Plan account is that they may reduce your own tax burden by helping to reduce the taxable value of your estate. Individuals making gift contributions may benefit from an annual federal gift tax exclusion of $15,000 per donor ($30,000 for married contributors), per beneficiary. And, in the event a contributor’s gifted amount to a beneficiary exceeds $15,000 in a single year, they may elect to treat up to $75,000 ($150,000 for married contributors) as having been made over a period of five years for federal gift tax exclusion. Please consult a tax advisor for more information.

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What are the federal and state tax advantages of opening an Oregon College Savings Plan account?

The benefit of contributing to an Oregon College Savings Plan account is that your account earnings have the opportunity to grow tax-free and so long as the money in your account is used for qualified expenses it can be withdrawn and spent tax-free, as well.

There is also an Oregon income tax benefit. If you are a resident of Oregon, contributions made to your account are deductible up to a certain limit (which is adjusted every year to account for inflation). For 2018, individual taxpayers are allowed to deduct $2,375 ($4,750 if filing jointly) for contributions made to any account in the Oregon College Savings Plan, so long as contributions are made prior to filing your state tax return that year. Remember, a tax deduction does not directly reduce your taxes owed (that’s known as a tax credit). A tax deduction simply reduces your taxable income, which reduces your overall tax liability.

Note: Recapture provisions apply. This means that if you withdrew funds for non-qualified expenses from your Oregon College Savings Plan account and you claimed a tax benefit for that year’s contribution, the state of Oregon will recapture any Oregon State income tax benefits that you had accrued on the principal portion of that withdrawal. Read through our Plan Disclosure Booklet (PDF) for more info.

Note, any funds that you plan to roll over from another 529 College Savings Plan are considered “new contributions” and will count towards the limit you’re allowed to deduct in a given tax year. It’s best to contact a tax advisor if you’re still unsure about what your tax implications might be.

TaxesRachel Diesel