Baton Rouge: Tax time is here, and families who invest in the START savings program for college can deduct up to $4,800 on their Louisiana state tax returns, according to State Treasurer John Kennedy.
"Every little bit helps in this economy, and it's important that families are aware of every tax break that's available to them," said Treasurer Kennedy. "Thousands of Louisiana families agree that START is a great deal for taxpayers. But it's much more than another tax break. It's also a smart investment."
Individual investors who made deposits into the START program by December 31, 2012, can exempt up to $2,400 per beneficiary per year from income reported on their state tax returns. For married couples filing jointly, the exemption can be up to $4,800.
If a START investor cannot claim the full exemption this year, he or she can carry the remainder forward to next year. For example, if a married couple deposited $4,000 into a START account this past year, they can deduct $4,000 on their joint return. Because they could not claim the full $4,800 tax exemption, the remaining $800 would be deductible next tax year. The couple could deposit $5,600 into their START account next tax year, and claim the entire amount on their joint return.
Families see additional tax benefits of START when the time comes to take out funds to pay for college. START withdrawals for college expenses are not subject to state or federal taxes. Likewise, any interest earned on START deposits is not taxed.
There are currently over 44,000 START accounts with deposits totaling $405 million. Deposits have consistently increased since the program's inception, and START took in nearly $63 million in new deposits in 2012. The rate of return on START investments ranged from 2.5 percent to 18.3 percent this past year depending on the investment option chosen. Additionally, all START accounts earn a state-paid match on deposits from 2 percent to 14 percent, depending on an account's classification and owner's adjusted gross income.
For more information on Louisiana's START savings program, visit http://www.startsaving.la.gov/savings/index.jsp or contact the Louisiana Office of Student Financial Assistance at 1-800-259-5626.