Your Tax Season Checklist
Tax time is just around the corner, and for many families, this may mean a refund is coming. This is the perfect moment to turn that “found money” into an investment for near or longer-term future education needs. In addition to college expenses, 529 plans may also be used for K-12 tuition and some expenses, trade schools or even accreditations and continuing education classes, and more. Here’s a quick, forward-looking checklist to help you prep now and feel confident when your refund lands.
Decide your refund split before it hits
If a refund is likely, decide ahead of time how you’ll use or invest it. Investing some or all of your refund in a 529 education savings account with The Education Plan® can make a meaningful dent in future costs. You can log in now and set up a one-time contribution so you’re ready the day your refund arrives. If you don’t have a 529 account yet, consider setting one up now, before your refund arrives. It takes about 15 minutes to open one, and you can contribute an amount that fits your needs.
Tip: Pair a one-time lump sum (maybe your tax refund) with a monthly automatic contribution (even “small” amounts add up). The lump sum builds momentum; the automatic contribution keeps your progress going all year.
Deduct 2025 contributions
If you’re a New Mexico resident, you can deduct 100% of the contributions you made to The Education Plan in 2025 from your New Mexico state taxable income. Log in to your account to see your total contribution amount in 2025.
Gather last year’s paperwork
If you made a qualified or non-qualified withdrawal from your 529 last year, keep an eye out for Form 1099-Q. This form documents all distributions from your account. It can help you determine if any of the withdrawals you made are subject to income tax. If you took a non-qualified withdrawal from your account, Form 1099-Q will include guidance on how to file. In addition to Form 1099-Q, you should gather records and receipts you kept over the last year to support qualified withdrawals.
Make gifting easy (hello, grandparents!)
Tax season is a time when many families talk about money. If grandparents or other loved ones ask if they can help, share your unique Ugift code with them and direct them to the Ugift gifting landing page.
In addition to the annual gift tax exclusion, 529 plans also allow a special “five-year” gift election that lets someone make a larger contribution and treat it as if it were made evenly over five years for gift-tax purposes. It’s a powerful way to celebrate milestones like birthdays or graduations or anything you deem gift worthy!
Tighten up your saving system for the year ahead
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Name your goal: “$3,000 this year” is more motivating than “save more”.
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Automate the first 10%: Start small ($25 or $50 per paycheck) and revisit periodically (think pay raise or bonus).
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Increase on autopilot: Schedule a mid-year bump (for example, July 1) so your progress accelerates with less effort.
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Keep receipts together: Create a single digital folder for support of qualified 529 withdrawal of funds, such as tuition, books, and housing documentation. Future-you will thank you next spring.
Small, steady steps, plus a well-intentioned use of a tax refund, can add up to big opportunities. If you’re ready to put your refund to work for future education, The Education Plan is here to help every step of the way.
This information is for general educational purposes and should not be considered financial advice or tax advice. We recommend consulting with a tax professional or financial advisor for personalized guidance.
Frequently Asked Questions
A 529 plan is a tax-advantaged investment account that is designed to grow savings for future education expenses for a specified beneficiary. 529 plans offer unique benefits and features that make them an appealing strategy for education related saving.
A 529 plan can be used for “qualified educational expenses.” For federal tax purposes, qualified educational expenses include:
- Tuition and fees at accredited higher education institutions
- Books
- Supplies and equipment
- Room and board for beneficiaries attending on at least a half-time basis.
- Computer technology, equipment, and internet access
- Up to $10,000 a year for K-12 tuition and expenses (Limit increase to $20,000 in 2026)
- Expenses for educational special needs services
- Transfers to an ABLE account for the beneficiary (transfer subject to annual limit)
- Apprenticeship expenses
- Up to $10,000 for student loan repayment
- Credentialing expenses and certification programs
- Roth IRA rollover for the beneficiary
If you're not sure if an expense is considered "qualified," we recommend consulting with a tax professional or advisor. Unqualified expenses will be treated like ordinary income: state and federal taxes will apply, with a 10% federal penalty for withdrawals from your 529 plan used to pay for them.
New Mexico residents can deduct contributions to The Education Plan from their state taxable income each year. This includes contributions made to an account that you are not the account owner of.
You cannot deduct contributions from federal income taxes.
Any person at least 18 years old with a valid Social Security Number (SSN) or Tax Identification Number (TIN) can open a 529 account. The account holder chooses the investment options, designates a beneficiary, and requests the distribution of funds.
The cost of college continues to rise, including tuition, housing, food and supplies, so it’s important to begin saving as soon as possible. You can learn more about how much a typical college education costs on our Cost of College page. It’s never too early or too late to start.
The Education Plan offers a variety of investment options to fit you and your family’s needs, risk tolerance and goals. You can see all of the available investment portfolios on the investments page.
Yes, you can use up to $20,000* a year to cover tuition and expenses for K-12 education.
Qualified K-12 expenses include:
- Tuition (public, private, and religious)
- Curriculum materials, books (including digital/online) and instructional materials
- Tutoring and instructional classes**
- Fees for a nationally standardized norm-referenced achievement test, an advanced placement examination, or any examinations related to college or university admission
- Dual enrollment program fees
Educational therapies for students with disabilities provided by a licensed or accredited practitioner or provider, including occupational, behavioral, physical, and speech-language therapies
*Starting in tax year 2026. The annual limit is $10,000 in tax year 2025 and permitted for tuition only.
**Tuition for tutoring or educational classes outside of the home, including at a tutoring facility, but only if the tutor or instructor is not related to the student and—
(i) is licensed as a teacher in any State,
(ii) has taught at an eligible educational institution,
or (iii) is a subject matter expert in the relevant subject.
You can open an account with The Education Plan online or by mailing in the enrollment form. In order to open an account, you will need the following information:
- Your social security number or TIN
- Your address
- Your bank account information (in order to fund the account)
- The beneficiary’s social security number or TIN
- The beneficiary’s birthday
-The beneficiary’s address
