College Savings Plan of Nebraska





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The following information, forms, and publications are provided for your convenience. For specific tax advice and guidance regarding your unique situation, please consult your tax professional.

2007 Nebraska Tax Reporting

The 2007 Nebraska Individual Income Tax Booklet provides:

NEW FOR 2007: The Nebraska College Savings Plan deduction limits have been increased to $5,000 (married-joint or single) and $2,500 (married-separate). See line 54 instructions.

Line 54 – Nebraska College Savings Plan

Nebraska allows a subtraction from an account owner's federal adjusted gross income for the amount of annual contributions made to the Nebraska College Savings Plan administered by the State Treasurer who has contracted with Union Bank of Lincoln. The maximum annual exempt contribution per return is $5,000 ($2,500 married filing separately). You cannot deduct contributions made to other states' plans on Line 54. Only the account owner may claim this deduction.

Note: If an entity (i.e., corporation, trust, partnership, or other entity) made a contribution to the Plan in 2007, you will want to consult your tax professional about the proper tax reporting.

Line 48 – College Savings Plan Recapture

Include on Line 48 any distribution from the Nebraska College Savings Plan resulting from the cancellation of a participation agreement to the extent of contributions previously claimed as exempt on the Nebraska income tax return. Note: A qualified rollover to a Section 529 plan sponsored by a state (or entity) other than Nebraska is deemed to be a cancellation subject to recapture.

Helpful Links:

1. Nebraska Department of Revenue web site
2. Nebraska Form 1040N Schedules I, II, and III (2007)
3. 2007 Nebraska Individual Income Tax Booklet

Please consult your tax professional or the Nebraska Department of Revenue for additional information.

2007 Gift Tax Reporting

It is important to review your annual gifts with your tax professional to determine whether a federal gift tax return (IRS Form 709) is required. If you made a gift to the College Savings Plan of Nebraska, a gift tax return may be required. If total gifts to one individual exceed $12,000 in the 2007 calendar year, a gift tax return may be required. The limit includes all gifts made by the donor to the beneficiary in the calendar year—not just contributions to a 529 plan.

If you accelerated gifts up to $60,000 for one beneficiary to take advantage of the 5-year special election, a gift tax return is required. Please consult your tax professional for additional information and guidance.

The gift tax return is due April 15, 2008, for 2007 gifts.

Helpful Links:

1. IRS web site
2. IRS Form 709 United States Gift (and Generation-Skipping Transfer) Tax Return (2007)
3. Instructions for Form 709 (2007)

2007 Withdrawals

If a withdrawal was distributed/taken from your College Savings Plan of Nebraska account in 2007, you will receive a Form 1099-Q reporting the total amount of the distribution. The 1099-Q will be mailed in late January to the account owner or beneficiary.

The form will include the total amount of the distribution taken in 2007 as well as the principal or basis and the earnings portions of the distributions.

You will need to consult your tax professional to determine whether the distribution you requested was for qualified or non-qualified expenses and to determine the taxability of the distribution.

Note: Form 1099-Q will be mailed to the account owner if he or she received the distribution. If the distribution was made payable to the beneficiary or directly to the institution of higher education, the form will be mailed to the beneficiary.

Helpful Links:

1. IRS web site
2. IRS Form 1099-Q (2007)

IRS Publication 970 - Tax Benefits for Education

IRS Publication 970 is an excellent resource to review for additional information about education tax benefits.

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