Utah Educational Savings Plan (UESP) Addback (code 54)
If you withdrew an amount from a Utah Educational Savings Plan (UESP) 529 account but did not use it for qualified higher education expenses, and the withdrawal did not meet an exception under IRC §529(c) or §530(d), the amount withdrawn must be included in Utah additions to income.
Enter the amount, up to the amount deducted on your Utah return in a tax year prior to 2008 or the amount used to calculate the UESP credit on your Utah return after 2008.
A UESP account owner will receive form TC-675H, Utah Educational Savings Plan Tax Statement for Contributions, Withdrawals, and Transfers, from UESP. Keep this form with your records.
Enter the taxable amount on Utah form TC-40A, Part 1, using code 54.
Utah Tax Credit for UESP Contributions
Each Utah taxpayer who owns a UESP account may be able to claim a Utah state income tax credit for contributions to the account. To qualify for the tax credit, the beneficiary must be designated before his or her 19th birthday. If this requirement is met, tax credits may be claimed for annual contributions over the life of the beneficiary's account.
The maximum amount that may be contributed to a UESP account and used in the calculation of the Utah tax credit in 2014 is $1,860 per beneficiary, or $3,720 per beneficiary if the taxpayer is married and filing a joint return. To qualify for the Utah state income tax credit, the UESP contribution must be made during the taxable year and must not have been deducted on your federal return.
How to Calculate Your UESP Tax Credit
The UESP Utah income tax credit is equal to 5% of the actual contribution made during the year to each qualified beneficiary’s UESP account, up to the maximum amount stated in the previous paragraph.
- If filing your 2014 Utah return as single, head of household, married separate, or qualifying widow(er), the credit is 5% of your contribution up to $1,860 per qualified beneficiary, with a maximum credit of $93 per qualified beneficiary;
- If filing your 2014 Utah return as married filing jointly, the credit is 5% of your contribution up to $3,720 per qualified beneficiary, with a maximum credit of $186 per qualified beneficiary;
- If filing your 2014 Utah return as married filing jointly and both you and your spouse receive a form TC-675H for contributions for the same qualified beneficiary, you must limit your total tax credit to $186 for that beneficiary.
If you are a UESP account owner, you will receive form TC-675H, Utah Educational Savings Plan Tax Statement for Contributions, Withdrawals and Transfers, from UESP. The amount of the credit will be shown on that form in box 1A or box 1B, whichever applies. (Contact UESP if you do not receive a form TC-675H.)
Enter the UESP tax credit from form TC-675H on your Utah TC-40A, Part 3, using code 20. Include TC-40A when you file your Utah Individual Income Tax Return.
Do not attach form TC-675H to your Utah return; keep it with your tax records.
We will not refund any credit that is more than the tax due, and you may not carry it back or forward.
The Utah tax credit is available only to the UESP account owner for contributions to the UESP account. You cannot take a credit for contributions to higher education savings accounts in other states, or to accounts you do not own.
For more information, read the instructions for form TC-675H when you receive it from UESP.
Federal and State Income Tax Treatment
Contributions to UESP accounts are not deductible for federal income tax purposes. However, earnings on investments in UESP accounts grow tax-deferred for federal and state purposes.
Withdrawals from a UESP account are exempt from federal and Utah income taxes if the funds are used for the beneficiary’s qualified higher education expenses (including tuition and fees; required books, supplies and equipment; and certain costs for room and board) at any college, university or technical school in the United States or abroad that participates in federal financial aid programs for students. Visit fafsa.ed.gov for a list of eligible schools.
Contributing Your Tax Refund to Your Individual UESP Account(s)
Utah Code §59-10-1313
You can apply the total amount of your Utah refund to your individual Utah You can apply the total amount of your Utah refund to your individual UESP account by entering an “X” in Part 5 on page 3 of your Utah TC-40 return. (Partial refunds are not allowed.) The Tax Commission will transfer your refund to UESP, along with your name, address and Social Security number. UESP will deposit your refund into the account that matches your Social Security number.
If you have multiple UESP accounts under your Social Security number, UESP will divide your refund equally among all your UESP accounts. UESP will match both Social Security numbers from a joint return to existing UESP accounts for dividing the refund.
If you do not have a UESP account, UESP will mail you information and an Account Agreement to open an account. If you do not respond and open an account within the given time, UESP will not open an account for you and will return your refund to you without interest or earnings.
Note: Your refund will not go to your UESP account until we have finished processing your return, which may take up to 90 days. We may subtract any federal or state debt you owe from your refund before it goes to your UESP accounts. Your refund will be treated as a current year contribution in the year contributed.