Bill Text: IN SB0141 | 2012 | Regular Session | Introduced
Bill Title: Income tax credit for college 529 plan.
Spectrum: Partisan Bill (Republican 1-0)
Status: (Introduced - Dead) 2012-01-04 - First reading: referred to Committee on Appropriations [SB0141 Detail]
Download: Indiana-2012-SB0141-Introduced.html
Citations Affected: IC 6-3-3-12.
Synopsis: Income tax credit for college 529 plan. Provides that a
contribution to a college choice 529 education savings plan does not
qualify for the 20% income tax credit if the contribution occurs after
the beneficiary becomes 32 years of age, for accounts opened after
December 31, 2011. Reduces the amount of contributions that qualify
for the tax credit in a year by the amount of any qualified withdrawals
that occur in the same year. (Current law provides for the recapture of
any credit granted when a nonqualified withdrawal is made.)
Effective: January 1, 2012 (retroactive).
January 4, 2012, read first time and referred to Committee on Appropriations.
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A BILL FOR AN ACT to amend the Indiana Code concerning
taxation.
(b) As used in this section, "account beneficiary" has the meaning set forth in IC 21-9-2-3.
(c) As used in this section, "account owner" has the meaning set forth in IC 21-9-2-4.
(d) As used in this section, "college choice 529 education savings plan" refers to a college choice 529 investment plan established under IC 21-9.
(e) As used in this section, "contribution" means the amount of money directly provided to a college choice 529 education savings plan account by a taxpayer. A contribution does not include any of the following:
(1) Money credited to an account as a result of bonus points or other forms of consideration earned by the taxpayer that result in
a transfer of money to the account.
(2) Money transferred from any other qualified tuition program
under Section 529 of the Internal Revenue Code or from any other
similar plan.
(3) Money contributed to an account after the beneficiary of
the account becomes thirty-two (32) years of age, for an
account opened after December 31, 2011.
(f) As used in this section, "nonqualified withdrawal" means a
withdrawal or distribution from a college choice 529 education savings
plan that is not a qualified withdrawal.
(g) As used in this section, "qualified higher education expenses"
has the meaning set forth in IC 21-9-2-19.5.
(h) As used in this section, "qualified withdrawal" means a
withdrawal or distribution from a college choice 529 education savings
plan that is made:
(1) to pay for qualified higher education expenses, excluding any
withdrawals or distributions used to pay for qualified higher
education expenses if the withdrawals or distributions are made
from an account of a college choice 529 education savings plan
that is terminated within twelve (12) months after the account is
opened;
(2) as a result of the death or disability of an account beneficiary;
(3) because an account beneficiary received a scholarship that
paid for all or part of the qualified higher education expenses of
the account beneficiary, to the extent that the withdrawal or
distribution does not exceed the amount of the scholarship; or
(4) by a college choice 529 education savings plan as the result of
a transfer of funds by a college choice 529 education savings plan
from one (1) third party custodian to another.
A qualified withdrawal does not include a rollover distribution or
transfer of assets from a college choice 529 education savings plan to
any other qualified tuition program under Section 529 of the Internal
Revenue Code or to any other similar plan.
(i) As used in this section, "taxpayer" means:
(1) an individual filing a single return; or
(2) a married couple filing a joint return.
(j) A taxpayer is entitled to a credit against the taxpayer's adjusted
gross income tax imposed by IC 6-3-1 through IC 6-3-7 for a taxable
year equal to the least of the following:
(1) Twenty percent (20%) of the remainder of the amount of the
total contributions made by the taxpayer to an account or accounts
of a college choice 529 education savings plan during the taxable
year minus qualified withdrawals made from the account
during the taxable year.
(2) One thousand dollars ($1,000).
(3) The amount of the taxpayer's adjusted gross income tax
imposed by IC 6-3-1 through IC 6-3-7 for the taxable year,
reduced by the sum of all credits (as determined without regard to
this section) allowed by IC 6-3-1 through IC 6-3-7.
(k) A taxpayer is not entitled to a carryback, carryover, or refund of
an unused credit.
(l) A taxpayer may not sell, assign, convey, or otherwise transfer the
tax credit provided by this section.
(m) To receive the credit provided by this section, a taxpayer must
claim the credit on the taxpayer's annual state tax return or returns in
the manner prescribed by the department. The taxpayer shall submit to
the department all information that the department determines is
necessary for the calculation of the credit provided by this section.
(n) An account owner of an account of a college choice 529
education savings plan must repay all or a part of the credit in a taxable
year in which any nonqualified withdrawal is made from the account.
The amount the taxpayer must repay is equal to the lesser of:
(1) twenty percent (20%) of the total amount of nonqualified
withdrawals made during the taxable year from the account; or
(2) the excess of:
(A) the cumulative amount of all credits provided by this
section that are claimed by any taxpayer with respect to the
taxpayer's contributions to the account for all prior taxable
years beginning on or after January 1, 2007; over
(B) the cumulative amount of repayments paid by the account
owner under this subsection for all prior taxable years
beginning on or after January 1, 2008.
(o) Any required repayment under subsection (o) (n) shall be
reported by the account owner on the account owner's annual state
income tax return for any taxable year in which a nonqualified
withdrawal is made.
(p) A nonresident account owner who is not required to file an
annual income tax return for a taxable year in which a nonqualified
withdrawal is made shall make any required repayment on the form
required under IC 6-3-4-1(2). If the nonresident account owner does
not make the required repayment, the department shall issue a demand
notice in accordance with IC 6-8.1-5-1.
(q) The executive director of the Indiana education savings authority
shall submit or cause to be submitted to the department a copy of all
information returns or statements issued to account owners, account
beneficiaries, and other taxpayers for each taxable year with respect to:
(1) nonqualified withdrawals made from accounts of a college
choice 529 education savings plan for the taxable year; or
(2) account closings for the taxable year.
