Tax Credit FAQ
Q. Am I eligible for the Indiana CollegeChoice 529 Investment Plan tax credit?
A. You may be eligible for a 20% state tax credit, up to a maximum of $1,000, for contributions to Indiana’s CollegeChoice 529 Savings Plan. While there are many 529 college savings plans available both in Indiana and nation-wide, only contributions made to this specific CollegeChoice 529 Savings Plans are eligible for this credit.
Q. Are grandparents and friends eligible to receive the tax credit?
A. Yes. Any Indiana taxpayer who contributes to a CollegeChoice 529 Plan is eligible to receive the tax credit. For example, grandparents and/or friends often contribute to a child’s 529 plan. These contributions mean that the grandparents and/or friends are eligible to receive the credit on their individual contributions.
Q. Can a taxpayer claim the tax credit if funds are rolled over from another 529 plan?
A. No. Effective January 1, 2010, the Indiana state income tax credit will no longer apply to rollovers from another state's qualified tuition program or to transfers from the Upromise service into a CollegeChoice 529 account. All other contributions will continue to be eligible for the tax credit to the extent previously allowable.
Q. Will this tax credit always be available?
A. The State Legislature adopted the CollegeChoice 529 Investment Plan tax credit in 2007. Although the credit is subject to change on a yearly basis, there is currently no expiration date for this credit.
Q. What is the deadline to receive the tax credit?
A. For a contribution to be valid for the tax year in question it must be received by December 31st.
Q. How many accounts are eligible for the tax credit?
A. The tax credit is based on the amount of the contribution. Whether the amount is invested in one account or several makes no difference to the value of the credit.
Q. How do I claim the tax credit?
A. The tax credit is entered on the individual income tax return (Form IT-40), under Indiana credits, line 13. Instructions are provided in the IT-40 Booklet on page 46 and are available on-line at http://www.in.gov/dor/3910.htm.
Q. Are there additional forms required to claim the tax credit?
A. Yes. There are 2 forms required to claim the tax credit: IN-529 and Schedule 6.
Schedule IN-529 and Schedule 6 must be attached when claiming the credit. The forms are available at:
Q. Can I claim the credit if I am a non-resident with Indiana taxable income?
A. Yes. The credit is limited to the lesser of 20% of contributions or $1,000 on the tax liability of the taxpayer. From IT-40 PNR must be completed by a nonresident or part year resident to claim the tax credit.
Q. Does line 21 of the Form IT-40, under Recapture of Indiana’s CollegeChoice 529 credit need to be completed?
A. This line is completed if you have an amount of previously claimed tax credit to be recaptured. If you claimed a tax credit and made a non-qualified withdrawal (s) from this plan, you will probably have to repay some or all of any credits previously claimed.
Withdrawals made for higher education expenses tend to be qualified withdrawals. Other withdrawals may fall under the category of ‘non qualified.’
See Schedule IN-529R https://forms.in.gov/Download.aspx?id=11460 to determine any amount to be recaptured.
For more information about this credit, see Income Tax Information Bulletin #98 at:
*Please consult your financial or tax professional to learn how state based tax benefits would apply to your specific circumstances*