Milwaukee With Kids is proud to partner with Edvest to help spread the word about their college savings programs.
By Jessica Wetzel, College Savings Program Director – Wisconsin Department of Financial Institutions
Tax season is in full swing, and while filing your taxes isn’t necessarily fun – a refund can be a great incentive to get them done.
While it may be tempting to spend it, saving all or even some of a refund in a 529 college savings account can make a significant difference in a child’s financial future.
It’s probably not news to you that higher education can be expensive.
Like me, I am sure many of you reading this are paying back student loans of your own.
Unfortunately, tuition costs are predicted to continue growing, and according to U.S. News data, the average annual cost of a public college education is $10,423 (for in-state students) and $22,953 (for out-of-state students).1 Multiply that by an average of four years, and you could look at anywhere from $40,000 to $90,000 for just tuition.
But don’t be scared by these big numbers.
Rather, focus on the fact that every dollar you save today may be one dollar your child does not have to pay back in student loans down the road.
Saving for Higher Education with a 529 Plan
My role as the Director of the Wisconsin College Savings Program is to help families develop a higher education savings strategy that works for them using Edvest 529, the state’s direct-sold 529 College Savings Plan.
A 529 plan is a tax-advantaged investment account designed to help families save for future higher education expenses for a designated beneficiary – usually a child, grandchild, or other loved one.
Savings in a 529 plan grow free from federal income tax, and withdrawals remain tax-free when used to pay for qualified education expenses like tuition and fees, books, laptops, and more at any accredited public or private university, college, technical college, community college, or professional school nationwide and abroad.
Additionally, Wisconsin taxpayers who open a new Edvest 529 account or contribute to an existing account by Tuesday, April 18, 2023 – regardless of their relationship to a child – can deduct up to $3,560 annually per beneficiary from their 2022 Wisconsin state income taxes for married individuals filing jointly. Individuals filing separately or divorced parents can deduct up to $1,780. Limitations apply.2
Use a Tax Refund to Boost or Start Your College Savings
I like to let families know that when it comes to saving for a loved one’s higher education, the most important thing you can do is start. And while that may seem easier said than done, leveraging ‘extra money’ that comes from a tax refund can provide the spark to get you started.
Consider the fact that the average tax refund amount for U.S. families in 2022 was $3,039.3
Assuming one only saves the average tax refund amount every year for 18 years – with no investment return – annual savings would accumulate to almost $55,000!
If you are already a college saver, think about contributing some or all of your tax refund to your existing 529 account to give it a boost. If you haven’t started saving for college yet, use that refund to open a 529 account for your child, grandchild, or other loved one and start your savings journey.
Get Started
At the end of the day, there is no right or wrong way to fund a 529 account. A lump-sum contribution that comes with something like a tax refund can certainly be appealing, but keep in mind that you can open an Edvest 529 account any time with as little as $25 and make regular ongoing contributions from your bank account or via payroll direct deposit. The first step is simply starting as early as possible in a child’s life.
Visit Edvest.com to learn more and start saving today!
1 Source: U.S. News. https://www.usnews.com/education/best-colleges/paying-for-college/articles/paying-for-college-infographic
2To learn more about Wisconsin’s Edvest 529 College Savings Plan, its investment objectives, tax benefits, risks, and costs, please see the Plan Description at Edvest.com. Read it carefully. In 2022, Wisconsin taxpayers can qualify for a state tax deduction up to $3,560 for each contributor per beneficiary per year from contributions made into an Edvest College Savings Plan. In 2023, Wisconsin taxpayers can qualify for a state tax deduction up to $3,860 for each contributor per beneficiary per year from contributions made into an Edvest College Savings Plan. Investments in the Plan are neither insured nor guaranteed and there is the risk of investment loss. Consult your legal or tax professional for tax advice. If the funds aren’t used for qualified education higher expenses, a federal 10% penalty tax on earnings (as well as federal and state income taxes) may apply. Check with your home state to learn if it offers tax or other benefits such as financial aid, scholarship funds, or protection from creditors for investing in its own 529 plan. TIAA-CREF Individual & Institutional Services, LLC, Member FINRA, distributor and underwriter for Wisconsin’s Edvest 529 College Savings Plan.
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Calie Herbst, Editor-in-Chief of Milwaukee With Kids, has spent over a decade combining her experiences as a parent of three to create a hub for Milwaukee’s family adventures.
Her decade-long teaching career in Milwaukee Public Schools and academic background, including a Master’s in Teaching from Marquette University and dual B.A.s in Sociology and Spanish from the University of Wisconsin – Madison, fuel her passion for inclusive and engaging family content.
Calie is also a recognized voice in local media, contributing to WISN Channel 12 News, WTMJ Wisconsin Morning News, Fox 6’s Real Milwaukee, and B93.3.
Discover more about Calie’s journey and editorial approach on her About Page and Editorial Policy Page.
