“What size clothes do they wear?” “Do they like this toy? This movie? This music?”
These are the questions family and friends ask when seeking the perfect gift for children during the holiday season.
Might we suggest a gift that — while it won’t bring the under-the-tree excitement of the latest shiny toy or video game — gives children an advantage in working toward future educational and career goals.
A 2013 University of Kansas study found that children who have money saved for education are three times more likely to enroll in college and four times more likely to graduate.
The Utah Educational Savings Plan (UESP) offers a way to contribute to a child’s future qualified higher educational expenses through its Gift Program. Account owners in Utah’s official 529 savings plan can invite family and friends to contribute to an account using a unique gift code and link to a personal gift page. Gifts may be made online, or by mail with a paper check.
Account owners also can customize the gift page by adding a picture of the child and a quote or an invitation in their own words. The link to the gift page can be shared via e-mail, or through social networks such as Facebook, Twitter, Pinterest and Instagram.
Don’t have a UESP account? Now would be a perfect time to open one and begin giving the gift of education. Visit uesp.org to learn how you can help children start to save for college. There is no cost to set up an account and no minimum balance required. Investments in UESP grow tax-deferred, and there is no tax penalty when earnings are used for qualified higher education expenses.
A gift for a child now becomes a gift for you in the new year because of tax benefits associated with 529 accounts.
Utah taxpayers/residents who are account owners, including Utah trusts, may take a tax credit on a portion of their contributions to UESP from Utah taxable income. Utah corporations may take a tax deduction on a portion of their contributions to UESP from Utah taxable income.
- Utah individuals.The 2015 individual Utah state income tax credit amount is up to $1,900 in contributions per qualified beneficiary ($3,800 for joint filers) multiplied by 5 percent, equaling a maximum state tax credit of up to $95 per qualified beneficiary ($190 for joint filers). Married couples claiming the joint tax benefits are not required to have separate UESP accounts.
- Utah trusts.The Utah state income tax credit for Utah trusts for 2015 is up to $1,900 in contributions per qualified beneficiary multiplied by 5 percent, equaling up to $95 per qualified beneficiary. Beginning this year, the Utah state income tax credit is up to $3,800 per qualified beneficiary multiplied by 5 percent (up to $190) for UESP accounts owned by a grantor trust where the grantor’s filing status is married, filing jointly,
- Utah corporations.Utah corporations are eligible for a state income tax deduction of up to $1,900 in contributions per qualified beneficiary.
Also, contributions to a UESP account are treated as a completed gift to the beneficiary for federal estate and gift tax purposes.
Normally, up to $14,000 ($28,000 if filing jointly) may be gifted from one individual to another each year without incurring gift tax liability. A special provision for 529 plans allows an individual to give $70,000 ($140,000 if married filing jointly) to a single beneficiary in one year without creating a taxable gift, as long as the individual makes an election to treat the entire gift as a series of five equal annual gifts.
Important Legal Notice
Read the Program Description for more information and consider all investment objectives, risks, charges, and expenses before investing. Call 800.418.2551 for a copy of the Program Description or visit uesp.org.
Investments in UESP are not guaranteed by UESP, the Utah State Board of Regents, the Utah Higher Education Assistance Authority (UHEAA) or any other state or federal agency. However, Federal Deposit Insurance Corporation (FDIC) insurance is provided for the FDIC-insured accounts. Please read the Program Description to learn about the FDIC-insured accounts. Your investment could lose value.
Non-Utah taxpayers and residents: You should determine whether the state in which you or your beneficiary pays taxes or lives offers a 529 plan that provides state tax or other benefits not otherwise available to you by investing in UESP. You should consider such state tax treatment and benefits, if any, before investing in UESP.