College Advantage Subtraction

Contribution Deduction:
You may deduct 2005 purchases of Tuition Units and contributions to the Ohio Tuition Trust Authoritys College Advantage 529 Savings Plan, up to $2,000 per beneficiary. Qualifying amounts exceeding the $2,000 limitation may be deducted on future years returns, subject to the annual $2,000-per-beneficiary limitation, until all unused portions are deducted. Married taxpayers may deduct up to a maximum of $2,000 per beneficiary whether their filing status is married filing joint or married filing separate. You may not use any contribution deduction carry-over to 2005 to the extent it has been reduced due to recapture of contribution deductions.

Note: This deduction does not apply to investments in IRC Section 529 qualified tuition plans offered by others states.

Adjustment for Earnings on Certain Distributions:
The earnings portion of distributions from IRC Section 529 Programs may generally be excluded from federal adjusted gross income if the distribution is used solely to fund qualified higher education expenses. If the earnings portion of a 2005 distribution from Ohios College Advantage program is excluded from federal adjusted gross income, then no further adjustment is required here.

For federal tax purposes, however, there are certain situations where, due to the coordination of benefits from a IRC Section 529 Program, with other federal tax benefits for higher education expenses (such as the federal Hope and Lifetime Learning Credits and Coverdale Education Account distributions), the earnings on a distribution from the College Advantage program which are actually used to pay qualified higher education expenses may not be excluded from federal adjusted gross income. If any portion of the earnings reported to you on your 2005 federal Form 1099Q from the College Advantage program are used to pay qualified higher education expenses, and because of certain federal tax limitations such earnings are not excluded from your federal adjusted gross income, you may exclude such portion by adding it to the total included here.

Note: This special earnings exclusion only applies to distributions from the College Advantage program and not to distributions from IRC Section 529 qualified tuition plans offered by other states.

Adjustment for Distributions at a Loss:
If a distribution reported to you on 2005 federal Form 1099Q reflects a refund of Tuition Credits or Tuition Units due to termination of the tuition payment contract and your Basis in Box 3 (related to the Credits and Units) is greater than the Gross Distribution in Box 1 (related to the Credits and Units) or the Earnings in Box 2 (related to the Credits and Units) is negative, you may add this loss (either negative earnings or Box 3 minus Box 1) to your total here as a positive number, if this loss is not deducted in federal adjusted gross income.

For more information, call 1-800-AFFORD-IT (233-6734) or log onto the Tuition Trust web site at www.collegeadvantage.com.

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