A Guide to Your 2015 UESP Tax Documents
It might seem early to think about doing taxes, but you can make it easier on yourself by getting organized now to file your 2015 federal and/or Utah state income tax returns.
First, ask yourself these questions:
1. Did I withdraw money from my UESP account(s) in 2015?
2. Did I roll over money from my account(s) to another 529 plan in 2015?
3. Am I a Utah taxpayer who contributed to a qualified account in 2015 or made a withdrawal or transfer?
Federal tax form
If you answered “yes” to either of the first two questions, then by January 31, 2016 you will receive from UESP Internal Revenue Service (IRS) Form 1099-Q, Payments From Qualified Education Programs. The 1099-Q reports the total of all withdrawals you made in 2015.
However, there can be confusion about who receives the 1099-Q form. Here’s how it works:
You, as the UESP account owner, will receive IRS Form 1099-Q, if the withdrawal was sent to:
- the account owner/agent
- another 529 plan
The beneficiary will receive IRS Form 1099-Q, if the withdrawal was sent to:
- the beneficiary
- an eligible education institution
Use the information on Form 1099-Q to prepare your 2015 federal income tax return. You don’t need to report earnings on your tax return if you used a withdrawal for qualified higher education expenses, such as tuition and fees; required books, supplies and equipment; and certain room and board costs. Keep receipts and other documentation to show that you used the withdrawal for qualified expenses.
If you do not receive this form, contact UESP. Form 1099-Q is also available online at my529.org through Account Access.
If you used a withdrawal to pay for nonqualified expenses, the earnings portion is subject to federal income tax as ordinary income, plus an additional 10 percent federal tax penalty on the earnings may apply. Utah taxpayers will also need to recapture (add back) the Utah state income tax credit/deduction. Please consult your tax advisor about these situations.
Utah tax document
If you answered “yes” to at least one part of question 3 above, UESP will send you form
TC-675H, Utah Educational Savings Plan Tax Statement for Contributions, Withdrawals and Transfers. Use TC-675H to claim Utah state income tax benefits and/or report nonqualified withdrawals, rollovers, and transfers as you prepare your 2015 tax return. This form will be mailed to you by January 31, 2016. If you do not receive this form, contact UESP. The form is also available online at my529.org through Account Access.
See the Program Description online at my529.org for more specific information about the TC-675H form related to Uniform Gifts to Minors Act/Uniform Transfers to Minors Act custodial accounts, and accounts owned by Utah trusts or corporations.
UESP will also send a copy of your TC-675H form to the Utah State Tax Commission. Do not attach it to your Utah state income tax return. Instead, enter your tax credit on form TC-40A, which you should submit with your return. Keep a copy of your TC-675H to substantiate your claim for a tax credit if the Utah State Tax Commission ever audits you.
Utah State Income Tax Benefit Amounts
You may claim the 2015 tax credit or deduction on contributions up to the following amounts per qualified beneficiary:
|Tax Filing Method||2015 Maximum Contribution Eligible for Utah State Income Tax Credit||Tax Credit Percentage||2015 Maximum Utah State Income Tax Credit||2015 Maximum Utah State Income Tax Deduction|
|Grantor Trust, Married Filing Jointly||$3,800||5%||$190||$0|
|All other Trusts||$1,900||5%||$95||$0|
To receive the tax credit or deduction, your account beneficiary must have been designated as such before age 19. If this requirement is met, you can claim the income tax credit or deduction each year you contribute to the account for that same beneficiary.
Pocket your income tax refund for college
While preparing your 2015 Utah state income tax forms, consider sending your tax refund directly to your UESP account(s). Your refund will be applied equally among accounts owned by you and, if filing jointly, your spouse.
To send a tax refund to UESP, on the final page of the Utah state income tax form TC-40, Part 5, simply enter an “X” next to the option to have a tax refund sent directly to UESP.