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Exempt Family Education Savings Account Deposits and Earnings
When you determine your Montana adjusted gross income, you can subtract from your federal adjusted gross income the lesser of the contributions that you made during 2005 to one or more Montana family education savings accounts or $3,000. If you are married, both you and your spouse are entitled to exclude up to $3,000 for contributions that you made to one or more Montana family education savings accounts. This exclusion is allowed only for contributions that you make to a Montana family education savings account that is owned by you, your spouse, your child or stepchild as long as your child or stepchild is a Montana resident. You cannot exclude contributions made to another state or private family education saving program. Withdrawals of your contributions and earnings from a Montana family education savings account are not taxable to you if you withdraw them to pay for qualified higher educational expense defined under federal law. If you withdraw these contributions for purposes other than to pay for qualified higher educational expenses, they are subject to a recapture tax of 6.9%. To establish your Montana family education savings account or for additional information, call the Montana Family Education Savings Program at (800) 888-2723 or visit their web site at http://montana.collegesavings.com.
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