This time of year I talk to many people who are scrambling to come up with tax deductions before the end of the year. Maxing out your deductible 529 plan contributions each year is a good idea and should have a place in that strategy. But before you rush to write a check by Dec. 31, check your state’s contribution deadline for tax purposes. Some states require contributions to be made during the calendar year in order to get the deduction; others (including Oregon) allow you to deduct contributions made up until you file your taxes. Check your plan’s rules as these vary by state, including what constitutes the contribution being made by the deadline– receipt of the funds by the plan or postmark on the date the contribution was sent, for example.
As an added bonus, some states allow grandparents to contribute directly to a parent-owned 529 account and still take the tax deduction on their own tax return. If you are fortunate enough to have grandparents or other relatives who contribute to your children’s college savings, you should verify with your state’s plan whether they can contribute directly to your account.