Tax refunds can go to college savings

SALT LAKE CITY — This year, Utahns can request that tax refunds are deposited directly into a college savings account.

"It's another excellent way for Utahns to save and invest in our future by simply checking a box on the income tax return," said Carey D. Woolsey, CPA and president-elect of the Utah Association of Certified Public Accountants.

Thanks to a bill passed during last year's Legislative session, tax forms will now contain a box, specifically on line No. 45, designating a Utah Educational Savings Plan account as the place where tax refunds can be stored. Instead of cutting a check or the money going into a checking account where it can be spent, the UESP account will keep it until the beneficiary is old enough to attend college. Along the way, it might even earn interest.

Already, taxpayers can collect a 5 percent tax credit on certain amounts deposited into the savings accounts each year. The new provision just makes it easier to "jump-start" saving earlier in the year, said UESP Executive Director Lynne Ward.

If taxpayers have yet to open a UESP account, checking the box will get them an enrollment kit in the mail. If more than one account is owned by the taxpayer, the refund will be allocated equally among the accounts, and if filed jointly, the refund will be spread among all the accounts held by both taxpayers.

– Wendy Leonard