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State Treasurer announces new deduction amount for college savings Iowa in 2011

Thursday, January 6, 2011

DES MOINES - State Treasurer Michael L. Fitzgerald announced recently that the deduction amount for those saving for their children's educations through College Savings Iowa has once again been raised. "Iowa taxpayers can now deduct the first $2,865 they contribute to a College Savings Iowa account from their state taxable income," said Fitzgerald. "This means that a married couple with two children will be able to deduct up to $11,460 in contributions on their 2011 state taxes."*

One of the best features of College Savings Iowa is how easy it is to get started. "All you need is $25 and ten minutes of your time to start saving," said Fitzgerald. "I encourage all families to save whatever they can today to help offset what has to be borrowed in the future."

College Savings Iowa lets anyone -- parents, grandparents, friends and relatives -- invest for college on behalf of a child. Investors do not need to be a state resident and can withdraw their investment tax-free to pay for qualified higher education expenses including tuition, books, supplies and room and board at any eligible college, university, community college or accredited technical training school in the United States or abroad.** For more information about College Savings Iowa, call 888-672-9116 or visit www.collegesavingsiowa.com.

* If withdrawals are not qualified, the deductions must be added back to Iowa taxable income.

Earnings on non-qualified withdrawals may be subject to federal income tax and a 10% federal penalty tax on the earnings, as well as state income taxes. The availability of tax or other benefits may be contingent on meeting other requirements.

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