The Tax Cuts and Jobs Act of 2017 expanded the qualified use of 529 savings accounts by allowing withdrawals for K-12 tuition expenses. Section 529 of the federal tax code sets the general rules of qualified tuition programs, which authorizes each state to administer its own program and determine its unique state tax treatment and other policies.
In Colorado, the intent of the state’s 529 college savings plan, CollegeInvest, is to encourage savings for higher education. Colorado tax law remains unchanged and CollegeInvest 529 plans can only be used for qualified higher education expenses. Any other use, including K-12 tuition expenses, are considered non-qualified withdrawals and subject to penalties.
Use your Colorado Income Tax Refund to help save for college. Are you expecting a tax refund when you file your Colorado State income taxes? Did you know that you can have your refund deposited directly into your CollegeInvest account?
According to How America Saves for College 2016, parents with a plan to pay for college saved nearly twice as much as non-planners. And students with a plan borrowed one-third less than non-planners.*