Section 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(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.Amended by P.L. 236-2023,SEC. 65, eff. 1/1/2024.Amended by P.L. 105-2022,SEC. 41, eff. 1/1/2024.Amended by P.L. 47-2022,SEC. 1, eff. 7/1/2022.Amended by P.L. 154-2020,SEC. 10, eff. 3/21/2020.Amended by P.L. 214-2018SP1,SEC. 9, eff. 5/14/2018.Amended by P.L. 181-2016, SEC. 25, eff. 7/1/2016.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.