When you determine your Montana adjusted gross income, you can subtract from your federal adjusted gross income the lesser of the contributions that you made during 2014 to one or more Montana family education savings accounts or $3,000. If you are married, both you and your spouse are entitled to exclude up to $3,000 for contributions that you made to one or more Montana family education savings accounts. This exclusion is allowed for contributions that you make to a Montana family education savings account that is owned by you or jointly with your spouse. As part of your exclusion, you may also be able to include amounts that you use to establish a Montana family education savings account (under the Montana Uniform Transfers to Minors Act or another state’s uniform gifts to minors act) for your child or stepchild if your child or stepchild is a Montana resident.
Withdrawals of your contributions and earnings from a Montana family education savings account are not taxable to you if you withdraw them to pay for qualified higher educational expenses defined under federal law. If you withdraw these contributions for purposes other than to pay for qualified higher educational expenses, they are subject to a recapture tax of 6.9%, which should be reported on Montana Form 2, line 52. To establish your Montana family education savings account or for additional information, call the Montana Family Education Savings Program at (800) 888-2723 or visit their website at montana.collegesavings.com.
Beginning in 2013, contributions to another state’s 529 college savings plan may now qualify for the deduction. The rules for which contributions to the Montana Family Education Savings Program qualify for the deduction apply to these contributions as well. Please note, contributions to a state’s prepaid tuition plan do not qualify. The department may ask for a copy of any statement(s) from the plan administrator after you file your return.