Idaho State Tax Commission

Idaho State Tax Commission

IDeal Idaho College Savings Program

IDeal is Idaho's official college savings program, created as a qualified tuition program under Internal Revenue Code section 529.

This program helps families save money to pay the higher education costs such as tuition, certain room and board costs, books, supplies, and other qualified higher education expenses for a designated beneficiary, all while receiving a tax benefit for their contributions. IDeal's "Quick Facts on 529s" explains more about the features of a 529 plan.

For the purposes of this document, the recipient is the person receiving the money and the beneficiary is the student receiving benefits from the account.

Tax benefits and consequences

Anyone can contribute to an Idaho college savings program, including family and friends.

Subtraction for Idaho College Savings Program

If you contribute to an IDeal account, you can claim an Idaho income tax deduction for your contribution of up to $6,000 per year or $12,000 if you're married and file a joint return. Claim the deduction on Idaho Form 39R (for Idaho residents), or Form 39NR (for nonresidents and part-year residents of Idaho).

You only get the deduction if you file an Idaho income tax return. For a contribution to be deductible for a taxable year, you must make it on or before December 31 of that calendar year. You can't take the contribution as a federal income tax deduction. Neither Idaho nor the federal government will tax the amount the account earns while the funds remain in the account. Contributions to a 529 program administered by a state other than Idaho aren't eligible for a deduction on the Idaho return.

Qualified withdrawals

A qualified withdrawal is used to pay for the following qualified expenses (see IRC 529(e)(3)):

  • Tuition and fees.
  • Books, supplies, and equipment.
  • Expenses for special needs services needed by a special needs beneficiary that are incurred in connection with enrollment or attendance at an eligible educational institution.
  • Expenses for room and board that are incurred by students who are enrolled at least half-time. The expense for room and board qualifies only to the extent that it isn't more than the greater of the following two amounts.
    • The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student.
    • The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution. You may need to contact the eligible educational institution for qualified room and board costs.
  • The purchase of computer or related peripheral equipment, computer software, or internet access and related services if used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible educational institution. (This doesn't include expenses for computer software for sports, games, or hobbies unless the software is predominantly educational in nature.)

Addition – Nonqualified withdrawal

When money is withdrawn from an account and not used to pay for qualified expenses of the designated beneficiary, the recipient of the money must add all amounts withdrawn to Idaho taxable income (if not included in federal adjusted gross income) in the year of the withdrawal. This addition to Idaho taxable income may include amounts contributed to the account, as well as earnings.

The recipient makes the addition on Idaho Form 39R (for Idaho residents) or Form 39NR (for nonresidents or part-year residents of Idaho).

A nonqualified withdrawal is an account withdrawal that isn't one of the following:

  • A qualified withdrawal;
  • A withdrawal paid to a beneficiary of the beneficiary (or the estate of the beneficiary) on or after the death of the beneficiary;
  • A withdrawal due to the disability of the beneficiary;
  • A withdrawal because the beneficiary receives a qualified scholarship or tuition assistance (if the amount withdrawn doesn't exceed the amount of the scholarship);
  • A withdrawal due to the use of education credits as allowed under federal income tax law;
  • A withdrawal that's rolled into another 529 plan that isn't sponsored by the state of Idaho according to the law, with appropriate documentation; or
  • A refund from an eligible educational institution that's recontributed to a qualified tuition program if the recontribution is made no later than 60 days after the date of the refund and doesn't exceed the refund amount.

See the Tax Consequences of Federal and Idaho College Savings Program Withdrawals for more examples of when an addition to Idaho income is required.

Addition – Rollovers to another state's qualified tuition program

If you roll funds from an Idaho college savings account to a qualified program operated by another state, you must make an addition to your Idaho taxable income. The amount added back is limited to your contributions deducted in the year of transfer and the prior tax year.

Other tax incentives for higher education

Some federal tax credits and deductions may be available if you're saving for or paying higher education costs. Review IRS Publication 970.

For more information

For more information on qualified tuition programs, see IRS Publication 970.

For more information on the Idaho College Savings Program, visit IDeal's website, or call (866) 433-2533.

An available disclosure statement describes investment objectives, risks, charges, expenses, and other important information. Because investing in IDeal is an important decision for you and your family, you should read and consider the statement carefully before investing.

IDeal is administered by the Idaho College Savings Program Board. Ascensus Broker Dealer Services, Inc. (ABD) is distributor of IDeal. ABD, the program manager, and its affiliates, have overall responsibility for the day-to-day operations, including investment advisory and recordkeeping and administrative services.

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Last updated Sept. 13, 2017