A Family Education Savings Account (FESA), also known as a 529 plan or a qualified tuition plan, is a savings account set up to save for a student's qualified education expenses. Earnings in the account grow tax free and distributions aren't taxable when used to pay for qualified education expenses. Eligible contributions of up to $3,000 per taxpayer, $6,000 if married filing jointly, are deductible from Montana taxable income.
Contact the Achieve Montana Program by calling (877) 486-9271 or by visiting AchieveMontana.com to set up a Montana FESA.
Taxpayers can deduct up to $3,000 ($6,000 if married filing jointly) of eligible contributions to a Montana FESA or another state's 529 plan on their Montana income tax return. The deduction is only available the year the contribution is made.
Contributions to a state's prepaid tuition plan do not qualify.
You may claim this deduction if:
Qualified education expenses are defined in 26 U.S.C. 529 and include:
Unqualified withdrawals are subject to a recapture tax at the highest marginal Montana income tax rate on amounts that previously reduced a taxpayer's Montana taxable income. Unqualified withdrawals include those that are used to pay for items other than qualified education expenses, or a withdrawal from an account that hasn't been open for more than one year.
If you are due a Montana income tax refund, you may directly deposit all or a portion of your tax refund into a Montana FESA or another state's 529 plan.
You must already have an established Montana FESA or 529 plan. You cannot create a new Montana FESA or 529 account on your tax return.
Please Note:
If you are filing a Montana Individual Income Tax return for the first time, you will not have this option.
First-time filers in Montana will receive a paper check by mail and cannot have a refund direct deposited.