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Illinois issues 529 deduction guidance

(March 4, 2009) - The Illinois Department of Revenue has issued a General Information Letter (IT 09-0003-GIL dated 1/26/09) providing a nonbinding interpretation of the state's income tax deduction for contributions to an Illinois 529 savings plan or prepaid tuition plan.

The letter suggests that contributions made by an Illinois taxpayer to both the state savings plan and the state prepaid tuition plan may not be combined in determining the deduction, which is capped at $10,000 per year ($20,000 for joint filers). The deduction may be claimed for contributions to one plan "OR" the other.

In addition, any contributions in excess of the annual limitation may not be carried forward for deduction in future years.

For more information, click here.

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