Current through Register Vol. 48, No. 38, September 20, 2024
a) IITA Section 203(a)(2)(Y) allows
individuals a subtraction modification in the computation of base income for
taxable years beginning on and after January 1, 2002 equal to the amount
contributed during the taxable year to an Illinois qualified tuition program,
subject to the limitation described in subsection (b) of this Section. For
purposes of this Section, "Illinois qualified tuition program" means:
1) A College Savings Pool Account under
Section 16.5 of the State Treasurer Act [15 ILCS
505/16.5] .
2) For taxable years beginning on and after
January 1, 2005, an Illinois Prepaid Tuition Trust Fund under the Illinois
Prepaid Tuition Act [110 ILCS 979 ].
b) For taxable years beginning on or after
January 1, 2005, the total subtraction modification allowed a taxpayer under
IITA Section 203(a)(2)(Y) and subsection (a) of this Section shall not exceed
$10,000 ($20,000 if married filing jointly) per taxable year.
c) "Contribution" Defined. For purposes of
IITA Section 203(a)(2)(Y) and this Section, the term "contribution" means any
payment directly allocated to an account for the benefit of a designated
beneficiary or used to pay late fees or administrative fees associated with the
account. In the case of a College Savings Pool Account, the contribution is the
amount paid by the taxpayer to the College Savings Pool. In the case of an
Illinois prepaid tuition contract, the contribution is the amount paid by the
taxpayer for the contract under Section 45 of the Illinois Prepaid Tuition Act
[110 ILCS
979/45] .
1)
Rollovers
A) From an Out-of-State Plan. In
the case of a rollover, as defined under IRC Section 529(c)(3)(C)(i), in which
an amount is transferred from a qualified tuition program established and
maintained by another state to an Illinois qualified tuition program, only the
portion of the rollover that constituted investment in the account for federal
income tax purposes shall be considered a contribution for purposes of IITA
Section 203(a)(2)(Y) and this Section. (See IITA Section
203(a)(2)(Y).)
B) From an Illinois
Plan. In the case of a rollover, as defined under IRC Section 529(c)(3)(C)(i),
in which an amount is transferred from one Illinois qualified tuition program
to another Illinois qualified tuition program, no portion of the rollover shall
be considered a contribution for purposes of IITA Section 203(a)(2)(Y) and this
Section. The purpose of the subtraction modification for contributions to an
Illinois qualified tuition program is to encourage and better enable Illinois
families to finance the costs of higher education by increasing savings for
higher education. A taxpayer's savings for higher education is not increased
when amounts are rolled over from one Illinois plan to another Illinois plan.
In addition, IITA Section 203(g) prohibits deduction of the same item more than
once.
2) Change in
Beneficiaries. A change in the beneficiaries of an existing plan shall not be
considered a contribution for purposes of IITA Section 203(a)(2)(Y) and this
Section.
3) Employer Contributions.
For purposes of this subtraction, contributions made by an employer on behalf
of an employee under IITA Section 218 shall be treated as made by the
employee.
d) Limitations
on Subtraction Modification
1) The
subtraction modification under IITA Section 203(a)(2)(Y) is allowed only to
individuals. In the case of a contribution to a College Savings Pool Account,
the subtraction is allowed only to the account "participant" or "donor" as
defined in Section 16.5 of the State Treasurer Act. In the case of a
contribution to an Illinois prepaid tuition contract, the subtraction is
allowed only to the account "purchaser" as defined in Section 10 of the
Illinois Prepaid Tuition Act.
2)
The subtraction modification is allowed only for contributions to either the
Illinois College Savings Pool or Illinois Prepaid Tuition Trust Fund. There is
no subtraction modification for contributions to a qualified tuition program
established and maintained by another state.
