Tax Tip From MEFA: Send Your Tax Refund Directly to Your 529

BOSTON--(BUSINESS WIRE)--Using a tax refund to add money to a 529 college savings account is one of the best ways to boost college savings, and it’s possible to transfer a tax refund directly into a 529 account. This is one of several tax season tips that can help families save for college, advises MEFA.

Tax filers can use IRS Form 8888 to direct their refunds into up to three separate accounts, including a U.Fund 529 college savings account. File Form 8888 with your federal tax returns and the IRS will do the rest.

“This is a great way to save money that you didn’t have yesterday, and won’t miss, and watch it grow in your college savings account,” said Jonathan Hughes, host of the MEFA Podcast, a weekly 30-minute conversation about college and career planning.

This tax season, families should also consider the following tips:

• The Massachusetts college savings tax deduction allows joint tax filers to deduct up to $2,000 and single filers to deduct up to $1,000 on state tax returns for funding a Massachusetts college savings plan, such as the U.Fund or the U.Plan Prepaid Tuition Program.
• Consult a professional tax advisor to see if there are other education-related tax benefits such as deducting expenses for daycare, preschool, kindergarten, after-school programs, and camps.
• Parents should evaluate their family finances and consider increasing contributions toward your U.Fund or U.Plan account, or open an account to begin saving.

MEFA’s online knowledge base includes articles on planning, saving, and paying for college, including the following article about Tax Forms Related to Higher Education.

If you’re interested in learning more about college savings options and strategies, visit mefa.org/college-savings-plans.

MEFA is a state authority, not reliant on state or federal appropriations, established under Massachusetts General Laws, Chapter 15C. MEFA's mission, since its founding in 1982, has been to help Massachusetts students and families access and afford higher education and reach financial goals through education programs, tax-advantaged savings plans, low-cost loans, and expert guidance. All of MEFA's work aligns with the ever-present goal to support the independence, growth, and success of Massachusetts students and families. Visit mefa.org to learn more or follow MEFA on Twitter @mefatweets, Facebook at mefaMA, LinkedIn, and Instagram.