What are the tax advantages of a 529 account?
Earnings in a 529 account grow tax deferred and can be withdrawn tax free when they are used for qualified higher education expenses. The earnings portion of nonqualified withdraws are subject to federal income tax with an additional 10% of earnings penalty. Kansas taxpayers also receive a deduction on their Kansas tax return for contributions of up to $3,000 for single filers or $6,000 for joint filers for each beneficiary. If you take a nonqualified withdrawal, you also have to repay any Kansas income tax deduction that was taken when the funds were contributed. See the Learning Quest Handbook for additional information about tax treatment of your account.
