Message Font: Serif | Sans-Serif
 
No. of Recommendations: 1
I received the tax booklet for my Colorado income tax and noticed an issue that had not occurred to me. Colorado gives a state sales tax rebate due to a tax limitation law and "excess" revenue. Colorado also allows a deduction of contributions to their college savings plans from your income for Colorado taxes.

The rebate is given in 6 "bands" of income. It occurs to me that if you are near the border on the band, contributions to the college savings plan could drop you into the lower one and you could end up losing more money than you might save. For married filing jointly, the difference between the top band and the one below it is $336 in rebate.

I doubt it will effect us because my 529 contributions this year were relatively small and 2001 may be the last year of the rebate but it is something to consider. I'm reasonably sure that Colorado is unusual with the combination of the rebate and the unlimited deduction for 529s but I thought I'd post a heads up.

rad
Print the post  

Announcements

Disclaimer:
In accordance with IRS Circular 230, you cannot use the contents of any post on The Motley Fool's message boards to avoid tax-related penalties under the Internal Revenue Code or applicable state or local tax law provisions.
What was Your Dumbest Investment?
Share it with us -- and learn from others' stories of flubs.
When Life Gives You Lemons
We all have had hardships and made poor decisions. The important thing is how we respond and grow. Read the story of a Fool who started from nothing, and looks to gain everything.
Community Home
Speak Your Mind, Start Your Blog, Rate Your Stocks

Community Team Fools - who are those TMF's?
Contact Us
Contact Customer Service and other Fool departments here.
Work for Fools?
Winner of the Washingtonian great places to work, and Glassdoor #1 Company to Work For 2015! Have access to all of TMF's online and email products for FREE, and be paid for your contributions to TMF! Click the link and start your Fool career.
Advertisement