AB 491

Under current law, there is a college tuition and expenses program, commonly

referred to as "EdVest I," under which a contributor may purchase "tuition units"

that can be used to pay qualified educational costs in behalf of a beneficiary. The

purchase of the units is limited to parents, grandparents, great-grandparents,

aunts, uncles, legal guardians, trusts created in behalf of a beneficiary, or individuals

purchasing units for their own use. Contributions made to an account set up under

the program, up to a limit of $3,000 each year for each beneficiary, may be deducted

from a contributor's income in the calculation of his or her income taxes if the

beneficiary of the account is one of the following: the claimant; the claimant's child;

the claimant's grandchild; the claimant's great-grandchild; or the claimant's niece

or nephew.

Also, under current law, there is a college savings program, commonly referred

to as "EdVest II," under which anyone may open an account for a prospective student,

regardless of the contributor's relationship to the beneficiary. Individuals may open

accounts for themselves, and a prospective student may be the beneficiary of more

than one college savings account. Contributions made to an account set up under this

program, up to a limit of $3,000 each year for each beneficiary, may be deducted from

a contributor's income in the calculation of his or her income taxes if the beneficiary

of the account is one of the following: the claimant; the claimant's child; the

claimant's grandchild; the claimant's great-grandchild; or the claimant's niece or

nephew.

An authorized contributor to an EdVest I or EdVest II account who is not the

owner of the account may claim a tax deduction for his or her contribution, subject

to the current law limitations, if the claimant is the parent, grandparent,

great-grandparent, aunt, or uncle of the beneficiary.

Current law authorizes an income tax deduction for amounts contributed to

both EdVest I and EdVest II by a divorced or legally separated parent of a child. The

deduction may be claimed without regard to whether the child is his or her

dependent. The total annual deduction under these two programs, per beneficiary,

claimed by married parents who file jointly or separately, or by the divorced or legally

separated parents of a child, may not exceed $3,000. The total annual deduction

under these two programs, per beneficiary, claimed by a married person who files

separately may not exceed $1,500 per claimant. The total annual deduction under

these two programs, per beneficiary, claimed by a formerly married couple may not

exceed a total of $3,000, or $1,500 per claimant, except that the former couple's

divorce judgment may specify a different division of the $3,000 maximum that may

be claimed by each former spouse.

For taxable years beginning after December 31, 2013, this bill indexes for

inflation the maximum amount of contributions that may be deducted under EdVest

I and EdVest II accounts.