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So here is my question (for tax year 2011):

  1. If I open and fund 529 College Savings Plan, do I get federal and state (Utah) tax deduction for my contributions?

  2. If I get a Treasury Savings Bond (Series EE/I), do I get federal and state (Utah) tax deduction?

I think they can be counted as "gifts" on the 1040 but I am not entirely sure.

3
  1. Utah offers a 5% tax credit on contributions of up to $1,740 single/$3,480 joint per beneficiary (credit of $87 single/$174 joint).

    Note: the link shows a list of all states which offer some kind of benefit.

    Gift starts at $13K/yr per gift recipient. You can gift up to 4 years in advance for a $65K gift this year, then no gift for next four. This must be declared on your tax return, but no consequence, i.e. no tax due.

  2. I leave this for another respondent.

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All savings bonds allow you to defer taxes until you cash them in.

If the proceeds are used for qualified educational expenses, the accrued interest is exempt from federal and state income tax. When savings bonds are paying decent rates, they are the best investment out there for college. Unfortunately, in 2011, the interest rates are terrible.

  • defering taxes is not a tax deduction. Remove the downvote, please. – littleadv Oct 28 '11 at 4:58
  • @littleadv It isn't a tax deduction per se, but when you combine the deferral with use of the proceeds for education, you net a nice deduction. – duffbeer703 Oct 30 '11 at 17:35
  • ok, makes sense now – littleadv Oct 30 '11 at 20:18
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Why would you get any deduction for bonds? Why would they be counted as gifts? It's an investment. The only thing you can get is tax benefits when you use the bonds for education expenses, and the interest may be tax-exempt.

See more details about the EE/I bonds on this site.

  • +1 - cause I don't know why either of us took a downvote. – JoeTaxpayer Oct 28 '11 at 19:08
  • Sorry guys... I intended to up vote both posts, but somehow screwed it up. I think I was zoomed out too far on the iPad. I flagged the post to see if a mod can undo. – duffbeer703 Oct 29 '11 at 3:19
  • HA! for me, the iPad injects more typos than it fixes. I love the thing, but it still gives my aging eyes issues. No problem, duff. – JoeTaxpayer Oct 29 '11 at 12:33
  • @duffbeer703 no prob, happens. Edited, so that you could remove. – littleadv Oct 30 '11 at 20:18

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