How are College Illinois! Prepaid Tuition Program plans treated under federal gift tax laws?
Section 529 provides that payments to the program are treated as a completed gift of present interest for federal gift tax purposes. Section 529 also provides a five-year averaging provision for any contributions in one taxable year that are greater than the annual allowable exclusion from federal gift tax, currently $13,000 ($26,000 for married couples filing jointly). This means that if a contribution by one individual to a single Beneficiary in any one tax year is greater than $13,000 ($26,000 for married couples filing jointly), the Purchaser may elect to average the amount of the gift over a five-year period. Please contact a tax professional or the Internal Revenue Service to determine how to make the five-year averaging election on IRS Form 709. There is an accelerated gift option that allows you to average gifts over $13,000 per beneficiary ($26,000 for married couples) over a five year period without incurring federal gift tax. So an individual can contribute up to $65,000 per
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