New tax break for private K-12 tuition begins this school year

Sep 22, 2018 by

A new state tax break is available this school year to help parents pay for private K-12 school tuition – a development triggered by the federal tax overhaul.

The state has for years allowed parents to avoid paying state income taxes on up to $10,000 each year that they put into a college savings account, known as a 529 CHET account. In addition, they have not had to pay taxes on the money when it is withdrawn or on the investment earnings when they use it to pay for college.

Now, those state tax benefits have been extended to allow parents and relatives to also use these 529 accounts for private, elementary and secondary school. That’s because the federal tax law that was changed last December on these accounts extends a federal tax benefit to include K-12 tuition.

The state set up its 529 program years ago to align with the federal law, so this recent federal expansion triggered an automatic expanded state tax break for K-12 tuition, the Connecticut Department of Revenue Services recently concluded.

“There is currently no tax statute that changes the Connecticut income tax treatment of CHET distributions,” said Jim Polites, a spokesman for the Department of Revenue Services. “Short of any provision or any change to the law, it’s not taxable.”

The legislature has been in session since the change in federal law, but did not act to prevent this tax break from going into effect.

Source: New tax break for private K-12 tuition begins this school year – The CT MirrorThe CT Mirror

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