Utah Code §59-10-1017 and Rule 865-9I-49

• About UESP
• Utah Tax Credit for UESP Contributions
• How to Calculate Your UESP Tax Credit
• Federal and State Income Tax Treatment
• Contributing Your Tax Refund to Your Individual UESP Account(s)
• More Information

About UESP

The Utah Educational Savings Plan (UESP) is a nonprofit Section 529 college savings plan administered by the Utah State Board of Regents and the Utah Higher Education Assistance Authority. It is Utah's official and only 529 plan.

The Plan allows adults to save for qualified future higher education expenses of their children, their grandchildren, or any other beneficiary.

Utah Tax Credit for UESP Contributions

Each Utah taxpayer who is a UESP account owner may contribute to the Plan and claim a Utah state income tax credit if the beneficiary of the Plan was younger than age 19 when designated on the UESP account.

The maximum amount that may be contributed to a UESP account and used in the calculation of the Utah tax credit in 2011 is $1,740 per beneficiary, or $3,480 per beneficiary if the taxpayer is married and filing a joint return. To qualify for the Utah state income tax credit, the UESP contribution must be made during the taxable year and not have been deducted on your federal return.

How to Calculate Your UESP Tax Credit

The UESP Utah income tax credit is equal to 5% of the actual contribution made during the year to each beneficiary’s UESP account, up to the maximum amount stated in the previous paragraph.

• If filing your Utah return as single, head of household, married separate, or qualifying widow(er), the credit is 5% of your contribution up to $1,740 per beneficiary, with a maximum credit of $87 per beneficiary;
• If filing your Utah return as married filing jointly, the credit is 5% of your contribution up to $3,480 per beneficiary, with a maximum credit of $174 per beneficiary;
• If filing your Utah return as married filing jointly and both you and your spouse receive a form TC-675H for contributions for the same beneficiary, you must limit your total tax credit to $174 for that beneficiary.

If you are a UESP account owner, you will receive form TC-675H, Utah Educational Savings Plan Tax Statement for Contributions, Withdrawals and Transfers, from UESP. The amount of the credit will be shown on that form in box 1A or box 1B, whichever applies. (If you do not receive a form TC-675H, contact UESP to obtain a copy.)

Enter the UESP tax credit from the form TC-675H on your Utah TC-40A, Part 3, using code 20. Attach the TC-40A to your TC-40, Utah Individual Income Tax Return.

Do not attach form TC-675H to your Utah TC-40. Keep that form with your tax records.

Any credit in excess of the tax due will not be refunded, and may not be carried back or carried forward.

The Utah tax credit is available only for contributions made by a UESP account owner to a UESP account. A credit is not available for contributions to higher education savings accounts in other states, or to accounts the taxpayer does not own.

Federal and State Income Tax Treatment

Contributions to UESP accounts are not deductible for federal income tax purposes. However, earnings on investments in UESP accounts grow tax-deferred for federal and state purposes.

Withdrawals from a UESP account are exempt from federal and Utah income taxes if the funds are used for qualified higher education expenses of the beneficiary (including tuition and fees; required books, supplies and equipment; and certain room and board costs) at any college, university or technical school in the United States or abroad that participate in federal financial aid programs for students. (Visit fafsa.ed.gov for a list of eligible schools).

Contributing Your Tax Refund to Your Individual UESP Account(s)

Utah Code §59-10-1313

You may elect to apply the total amount of your Utah refund to your individual Utah Educational Savings Plan account by entering “X” on line 46 of your Utah TC-40 return. (Partial refunds are not allowed.) The refund will be transferred by the Tax Commission to the Utah Educational Savings Plan, along with your name, address and social security number. UESP will deposit the refund into the individual account that matches your social security number.

If you have multiple UESP individual accounts under your social security number, UESP will divide your refund equally among all your UESP individual accounts. Both social security numbers from a joint return will be matched to existing UESP individual accounts for dividing the refund.

If you do not have a UESP individual account, UESP will mail you information and an Account Agreement to open an account. If you do not respond and open an account within the time frame stated in the information you receive, no account will be opened and your refund will be returned to you by UESP without interest or earnings.

NOTE: Your refund will not be deposited in your UESP account until your return has completed processing, which may take up to 90 days. Any outstanding federal or state debt you owe may be subtracted from your refund before it is deposited into your UESP accounts. The refund will be treated as a current year contribution in the year deposited.

For More Information on UESP

For more information on UESP accounts, or to request an enrollment kit, call UESP at 801-321-7188 or 1-800-418-2551. You can also download a Program Description, download an Account Agreement, or open an account online at UESP’s website, uesp.org.