February 2021: Employer Tax Credit for 529 Plan Contributions

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EMPLOYER TAX CREDIT FOR 529 PLAN CONTRIBUTIONS

2021 marks the final year that employers can take advantage of a tax credit for employer 529 contributions. The Working Families College Savings Act, HB18-1217 was signed on May 29, 2018. The act created an income tax credit for tax years 2019 through 2021.

Employers that make contributions to a 529 qualified state tuition program account owned by their employees are allowed a credit on their 2021 income tax return in the amount of 20% of the contribution per employee, not to exceed $500 per employee.

Although the credit is only in effect for the remainder of the year, adding employer-funded 529 contributions to your benefits package is worth considering. Employers can structure their contributions in the form of a match, or a one-time, annual, or per pay period contribution. Many plans have low minimum contributions, and employers can contribute as much as they like, but the tax credit is maxed out at $2,500 contributed per employee. Any size company is allowed to participate – the flexibility of employer 529 contributions is a great advantage to providing the benefit.
A 529 plan is a tax-advantaged savings plan designed to help pay for education. There are many benefits in investing in a 529 plan, which include the following:
  • Earnings in a 529 plan grow federal tax-free and contributions do not have to be reported on your federal return
  • You will not be taxed when the funds are used for qualified education expenses, up to the full amount of college tuition and fees, or up to $10,000 per year for private, public, or religious elementary and secondary schools
  • For individuals, contributions to a Colorado 529 plan are deductible in computing Colorado taxable income
  • Almost anyone can be a beneficiary of a 529 plan, and the 529 account owner remains in control of the account
  • Deposits up to $15,000 per individual per year ($30,000 for married filing joint) qualify for the annual gift tax exclusion
  • There are no income limits, age limits, or annual contribution limits
For more information on CollegeInvest 529 plans, including employer-funded contributions, please reach out to employerprogram@collegeinvest.org. If you have additional questions on the tax benefits of 529 plans, we would be happy to assist.
2021 Soukup Bush Deadlines
FEBRUARY 22, 2021 – Please provide all documents and required information for partnership and S-corporation tax returns by February 22, 2021. In order to provide our best service, your tax return will be extended and completed after April 15, 2021, if there is still outstanding information needed by February 22, 2021.
Please Note: extended business returns will be prepared after the individual filing deadline, April 15, 2021. Thus, we will also be filing an extension for your individual return if we extend your business return.
MARCH 22, 2021 – Please provide all documents and required information for individual and C-corporation tax returns by March 22, 2021. In order to provide our best service, your tax return will be extended and completed after April 15, 2021, if there is still outstanding information needed by March 22, 2021.
Filing Deadlines
FEBRUARY 1, 2021 – Form 1099 NEC must be filed with the IRS for any non-employee compensation paid
MARCH 1, 2021 – Forms 1099 and 1096 must be filed with the IRS if filing by mail
MARCH 15, 2021 – Federal and state income tax returns are due for flow-through entities, including partnerships and S-Corporations
MARCH 31, 2021 – Forms 1099 and 1096 must be filed with the IRS if filing electronically
APRIL 15, 2021 – Federal and state income tax returns are due for individual taxpayers, C-Corporations, and Trusts
SEPTEMBER 15, 2021 – Federal and state income tax returns are due for flow-through entities, including partnerships and S-Corporations if extended
SEPTEMBER 30, 2021 – Federal and state income tax returns are due for trusts if extended
OCTOBER 15, 2021 – Federal and state income tax returns are due for individual taxpayers and C-Corporations
2021 ESTIMATED PAYMENT DEADLINES

APRIL 15, 2021 – 1st quarter estimated payments for 2021 are due to the IRS and Colorado Department of Revenue

JUNE 15, 2021 – 2nd quarter estimated payments for 2021 are due to the IRS and Colorado Department of Revenue

SEPTEMBER 15, 2021 – 3rd quarter estimated payments for 2021 are due to the IRS and Colorado Department of Revenue

Grace Kucza

EMPLOYEE SPOTLIGHT | Grace Kucza
Grace joined Soukup, Bush & Associates in November of 2012. She is responsible for reviewing both individual and business tax returns as well as assisting with attestation engagements. Prior to joining the firm, Grace worked for two years at a public accounting firm in Kansas.
Grace graduated with a Bachelor of Science in Business Administration with a focus in accounting from Trinity University in 2009. While at Trinity, Grace played four years of collegiate soccer and was voted team captain her senior year. She received her Master in Accounting from the University of Kansas in 2010 and received her Certified Public Accounting license in 2013.
Grace still enjoys playing soccer and volunteering her time as a coach. She looks forward to exploring the vast Colorado wilderness while hiking, biking, and taking photographs every now and then to catch her breath.