GOLDEN VALLEY, Minn. - For college students and their parents worried about paying for higher education, there might be some relief from to a recently passed tax bill in Minnesota.
"Effective for 2017, MN taxpayers may be eligible either a tax deduction or tax credit related to plan contributions for the year," said Dan Ament, financial advisor for Morgan Stanley in Wayzata. "The new benefits are applicable regardless of which state sponsored 529 plan you choose."
For college savings plans, you could be eligibile for a tax deduction or a tax credit. "Net contributions completed by a taxpayer may be deductible for Minnesota income tax purposes each year up to $3,000 for joint filers and up to $1,500 for all other filers," Ament said. "Eligible taxpayers may be eligible for a non-refundable tax credit of 50% of contributions made to a Section 529 college savings plan, reduced by any withdrawals, made by the taxpayer during the year, with a maximum credit amount of up to $500. The credit eligibility phases out for filers with adjusted gross incomes in excess of $75,000."
In addition, Ament said there's also a student loan credit. "The new credit offers student loan debtors reimbursement for a portion of their loan payments, up to a maximum of $500 per year (subject to eligibility criteria)."
Ament said the bottom line is to seek the advice of a qualified tax advisor if you have questions related to your eligibility.