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It’s Not Too Late! Take Advantage of 2020 OCSP Tax Benefits.
Although the April 15th tax deadline is quickly approaching, you still have time to contribute to the Oklahoma 529 College Savings Plan or open a new account to be eligible for an Oklahoma tax deduction. Limitations apply*.
Enjoy Significant Tax Benefits while Saving for College
Oklahoma residents, regardless of their relationship to a child, can deduct up to $10,000 for individual filers and $20,000 if filing a joint state tax return. Plus, OCSP investment earnings grow tax-deferred and are tax-free at both the state and federal level when used to pay for qualified college expenses such as tuition, living expenses, books, computers/tablets and more!
It’s easy to add 2020 OCSP contributions to your Oklahoma income tax forms. Tax software can automatically calculate the impact of any annual 529 contributions. If you complete a paper tax return, visit www.ok.gov/tax and download the 2020 Oklahoma Resident Individual Income Tax Forms and Instructions. Please review the 511-C Instructions on p. 22 and the 511-C section on p. 45 of the Oklahoma Resident Income Tax form. Consult a tax professional with any questions.
Regardless of how you file, Oklahoma requires proof of contributions. You will find your 2020 contribution history on quarterly statements. You may access statements securely, online at Ok4saving.org. For gift givers, you may provide canceled checks or confirmations of your contributions from Ugift or bank accounts.
Carry Forward for Future Tax Benefits
Are you rolling over balances from another 529 plan or plan to make a large contribution from savings, inheritance or a bonus? If your contributions are greater than the maximum annual state tax deduction, you may carry forward the balance until exhausted. To take advantage, you may claim the deduction annually following the same process as long as you continue to provide proof of contributions.
Want to Really Build your College Savings? Superfund.
Families anticipating large future education expenses like graduate school may be interested in accelerating contributions now. Grandparents may be interested in jumpstarting college savings for grandchildren while realizing estate tax planning benefits. There’s no federal gift tax on contributions up to $15,000 per year for single filers and $30,000 for married filers. There’s even an option to gift amounts up to $75,000 for single filers and up to $150,000 for married filers if pro-rated over 5 years. This means you could make a one-time gift equivalent to the 5-year amount and it could all qualify for the federal gift tax exclusion. Consult your tax professional.
OCSP Tax Season Fast Facts
- 2020 OK tax deduction is $10,000 for individual filers and $20,000 if filing jointly.
- 1099-Q forms reporting any 2020 withdrawals have mailed. You may also download by securely logging in to your OCSP account.
- Claim your OK tax deduction using the 2020 Oklahoma Resident Individual Income Tax Forms and Instructions, most tax software, or consult your tax professional.
- Carry-forward additional contributions into future tax years.
- Consider superfunding to help a child or grandchild’s college savings grow with up to five years of contribution while still qualifying for an annual federal gift tax exclusion. Learn more.
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*To learn more about the Oklahoma 529 College Savings Plan, its investment objectives, tax benefits, risks and costs, please see the Plan Description at ok4saving.org. Read it carefully. Oklahoma residents can reduce their state taxable income by up to $20,000 if married filing jointly ($10,000 filing single) from contributions made into an Oklahoma 529 College Savings Plan. Check with your home state to learn if it offers tax or other benefits such as financial aid, scholarship funds or protection from creditors for investing in its own 529 plan. Investments in the Plan are neither insured nor guaranteed and there is the risk of investment loss. If the funds aren’t used for qualified higher education expenses, a 10% penalty tax on earnings (as well as federal and state income taxes) may apply. TIAA-CREF Individual & Institutional Services, LLC, Member FINRA, distributor and underwriter for the Oklahoma 529 College Savings Plan.