The happenings "inside" the Wisconsin State Treasury and across the street at the State Capitol

A Tax Change to “Grandparent Gifts” for EdVest


Wisconsin’s 529 college savings plans are among the few in the country that allow additional state tax deductions for grandparents, aunts, and uncles when they make contributions toward a child’s education, along with the more usual parent contribution.  Both EdVest and Tomorrow’s Scholar allow either single or joint taxpayers up to $3,000 a year for each beneficiary or child.

However, an interpretation by the state Department of Revenue (DOR) changes the procedure slightly.  Typically, grandparents write a check at birthdays and other occasions, adding the gift to an existing savings account the parent owns.  They could then take the Wisconsin deduction, independently of what the parent could deduct.  In a recent statement, DOR now says the grandparent has to own a separate account to take the state tax deduction.

Since EdVest currently waives account fees for Wisconsin residents, the only cost to grandparents, aunts, and uncles is the few minutes to open a new account naming the child as beneficiary.  A beneficiary can have multiple 529 accounts, drawing from each as needed or consolidated at some point.  The deduction privilege has not changed, just the procedure.

The 529 program’s staff is currently looking at changes in statutes or rules to simplify the process.  Call the office at 608-264-7886 if you need further information.

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One response

  1. Pingback: Investing in Your Children’s Future Takes a Few Clicks and 5 Minutes: EdVest College Savings « wistatetreasury

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