§ 6-3-3-12 — Credit for contributions to college choice education savings plan; date of contribution; repayment of credit after nonqualified withdrawals; designation of contributions after December 31, 2018

Indiana § 6-3-3-12

• Jurisdiction: Indiana
• Art. 3: STATE INCOME TAXES
• Ch. 3: Credits

Text

Note: This version of section effective until 1-1-2026. See also
following version of this section, effective 1-1-2026.
Sec. 12. (a) As used in this section, "account" has the
meaning set forth in IC 21-9-2-2.
(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 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 transferred from any qualified ABLE program under
Section 529A of the Internal Revenue Code or any other similar
plan.
(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, except that the term does
not include qualified education loan repayments under Section
529(c)(9) of the Internal Revenue Code.
(h) As used in this section, "qualified K-12 education expenses"
means expenses that are for tuition in connection with enrollment or
attendance at an elementary or secondary public, private, or religious
school located in Indiana and are permitted under Section 529 of the
Internal Revenue Code.
(i) 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.
However, a qualified withdrawal does not include a withdrawal or
distribution that will be used for expenses that are for tuition in
connection with enrollment or attendance at an elementary or
secondary public, private, or religious school unless the school is
located in Indiana. 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, to any qualified ABLE program under
Section 529A other than an Indiana ABLE 529A savings plan adopted
by the state under IC 12-11, or to any other similar plan.
(j) As used in this section, "taxpayer" means:
(1) an individual filing a single return;
(2) a married couple filing a joint return; or
(3) for taxable years beginning after December 31, 2019, a
married individual filing a separate return.
(k) 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) The following amount:
(A) For taxable years beginning before January 1, 2019, the
sum of twenty percent (20%) multiplied by the amount of the
total contributions that are made by the taxpayer to an account
or accounts of a college choice 529 education savings plan
during the taxable year and that will be used to pay for qualified
higher education expenses that are not qualified K-12 education
expenses, plus the lesser of:
(i) five hundred dollars ($500); or
(ii) ten percent (10%) multiplied by the amount of the total
contributions that are made by the taxpayer to an account or
accounts of a college choice 529 education savings plan
during the taxable year and that will be used to pay for
qualified K-12 education expenses.
(B) For taxable years beginning after December 31, 2018, the
sum of:
(i) twenty percent (20%) multiplied by the amount of the total
contributions that are made by the taxpayer to an account or
accounts of a college choice 529 education savings plan
during the taxable year and that are designated to pay for
qualified higher education expenses that are not qualified
K-12 education expenses; plus
(ii) twenty percent (20%) multiplied by the amount of the
total contributions that are made by the taxpayer to an
account or accounts of a college choice 529 education
savings plan during the taxable year and that are designated
to pay for qualified K-12 education expenses.
(2) One thousand five hundred dollars ($1,500), or seven hundred
fifty dollars ($750) in the case of a married individual filing a
separate return.
(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.
(l) This subsection applies after December 31, 2018. At the time a
contribution is made to or a withdrawal is made from an account or
accounts of a college choice 529 education savings plan, the person
making the contribution or withdrawal shall designate whether the
contribution is made for or the withdrawal will be used for:
(1) qualified higher education expenses that are not qualified
K-12 education expenses; or
(2) qualified K-12 education expenses.
The Indiana education savings authority (IC 21-9-3) shall use
subaccounting to track the designations.
(m) A taxpayer who makes a contribution to a college choice 529
education savings plan is considered to have made the contribution on
the date that:
(1) the taxpayer's contribution is postmarked or accepted by a
delivery service, for contributions that are submitted to a college
choice 529 education savings plan by mail or delivery service; or
(2) the taxpayer's electronic funds transfer is initiated, for
contributions that are submitted to a college choice 529 education
savings plan by electronic funds transfer.
(n) A taxpayer is not entitled to a carryback, carryover, or refund of
an unused credit.
(o) A taxpayer may not sell, assign, convey, or otherwise transfer the
tax credit provided by this section.
(p) 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.
(q) 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.
(r) Any required repayment under subsection (q) 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.
(s) 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.
(t) 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, including
subaccounts of a college choice 529 education savings plan for
the taxable year; or
(2) account closings for the taxable year.
(u) The following apply to contributions made after December 31,
2023:
(1) For purposes of this section, all or part of a contribution made
after the end of a taxable year, and not later than the due date of
the taxpayer's adjusted gross income tax return for the taxable
year under this article (as determined without regard to any
allowable extensions), shall be considered as having been made
during the taxable year preceding the contribution if:
(A) the taxpayer elects to treat all or part of a contribution as
occurring in the taxable year preceding the contribution;
(B) the taxpayer designates the amounts of the contribution to
be treated as occurring in each taxable year, in the case of a
single contribution that is to be allowable under this section in
two (2) separate years; and
(C) the taxpayer irrevocably waives the right to claim the
contribution claimed in the taxable year preceding the
contribution as occurring in the taxable year of the contribution.
(2) The Indiana education savings authority may prescribe any
forms necessary for purposes of this subsection.

Legislative History

As added by P.L.192-2006, SEC.4. Amended by P.L.211-2007, SEC.22; P.L.131-2008, SEC.13; P.L.182-2009(ss), SEC.198; P.L.181-2016, SEC.25; P.L.214-2018(ss), SEC.9; P.L.154-2020, SEC.10; P.L.47-2022, SEC.1; P.L.105-2022, SEC.41; P.L.122-2022, SEC.1; P.L.236-2023, SEC.65.