Bright Start Top Year-End Questions

  1. Where is my 2018 Tax Form?

    IRS Tax Form 1099-Q is issued only when a withdrawal is requested during the year (please see Q&A #2 for information on Year-to-Date contributions for 2018). The 1099-Q tax forms were mailed at the end of January and are also posted on the Bright Start web site. To access them on the Bright Start site – here are the steps:

    1. Log into your account
    2. Once logged in to your account click on the “Statements & Tax Forms” menu
    3. On this page you will have the ability to select several “Document Types” including “Account Statement”; “Welcome Letter/Confirm”; “Prior Manager Statements”; or “Tax Forms (1099-Q)”.
      1. Select “Tax Forms (1099-Q)”
  2. Where can I get the full year 2018 contribution amount for taxes?

    We’ve included 2018 contribution information for you on your December 31, 2018 account statement. Right below the pie chart on your statement we have provided “Year-to-Date” Contributions for calendar year 2018. Contributions are reported on a cash basis so if you made any contributions online in late December 2018 or by mail with a late December 2018 postmark you will want to see if they were included in the transaction activity on the December 31st statement or if we received them and posted them in January 2018 as “Prior Year” contributions. A 2018 postmarked contribution invested in January 2018 as a “Prior Year” contribution should be eligible for the 2018 Illinois tax deduction. PLEASE review to your records to match your total contributions. The year-to-date contribution amount we report we include will also include contributions to your account by others (those generally would be deductible by the contributor versus you). Also, keep in mind only the basis or contribution portion of an out-of-state rollover is deductible (the earnings portion cannot be deducted).

  3. Where can I access my statements for timeframes before July 2018?

    Yes, we have prior manager statements available. Here are the steps to access:

    1. Log into your account
    2. Once logged in to your account click on the “Statements & Tax Forms” menu
    3. On this page you will have the ability to select several “Document Types” including “Account Statement”; “Welcome Letter/Confirm”; “Prior Manager Statements”; or “Tax Forms (1099-Q)”.
      1. Select “Prior Manager Statements”
  4. For more tax information click here
  5. For all of our FAQs click here
  6. What is the limit for the Illinois state income tax deduction?

    Individuals who file an Illinois state income tax return are eligible to deduct up to $10,000 per tax year ($20,000 for married taxpayers filing jointly) for total combined contributions to an Illinois 529 plan.

  7. Who can take the Illinois state income tax deduction?

    The Illinois state income tax deduction is available to any individual who contributes to an Account and files an Illinois state income tax return.

  8. What is the deadline to contribute to take advantage of the Illinois state income tax deduction?

    A contribution needed to be postmarked to Bright Start no later than December 31st, 2018 to be eligible for a 2018 deduction.

    Any contribution made after 3pm CT on Friday December 29th but before 11:59 CT on December 31st will post to your account on January 2nd, 2018, but will be coded a “Prior Year Contribution” and generally should be eligible for the 2018 state income tax deduction.

    Contributions addressed to Bright Start and postmarked in 2018 but received in 2018, will be invested on the day the check is received – will be coded as a “Prior Year Contribution” and will be considered a 2018 contribution for tax deduction purposes.

  9. How do I establish online access?

    It’s easy to create new login credentials if you have not logged into your account since the transition of Bright Start in July. Simply use the following steps:

    • Select the “Log In” button in the top, right corner at BrightStartSavings.com
    • Select “Account Owner”
    • Select the “Sign up for online access” button in the middle of the login screen

    You will need your Bright Start account number as well as some personal information to create a new username and password for account access. You can find your Bright Start account number on the welcome confirmation letter you received in July or your September 30, 2018 Bright Start account statement.  You can also use the “Click here to view your account #” tool found on the login page to retrieve your account number through the secure website.

  10. Will you send me a form showing my contributions so I can take the Illinois state income tax deduction?

    In order to take the Illinois state income tax deduction for your contribution, you would simply need to provide your tax preparer with a copy of your canceled check, or bank statement.  Any Illinois tax payer who makes a contribution to a Bright Start account should be eligible to take advantage of the state income tax deduction.  It is our understanding that Schedule M is where tax deductible contributions to Bright Start are to be reported for Illinois state income tax purposes.

  11. If I make an accelerated gift for Federal Gift Tax purposes this year, will I be able to take the Illinois state income tax deduction in each of the next 4 years for that contribution?

    It is our understanding that you may take the Illinois state income tax deduction only in the year that the contribution was made.  The Illinois state income tax deduction does not carry forward to future years for an accelerated gift.  You will want to consult your tax or financial professional for more information regarding a large gift and any tax considerations that should be considered.

  12. Do rollovers from an out-of-state 529 plan count for the Illinois state income tax deduction?

    The contribution, or basis, portion of a rollover from a non-Illinois 529 plan is eligible for the Illinois state income tax deduction, but not the earnings portion. In order for the rollover contribution to be considered for Illinois state income tax deduction purposes, the rollover check needed to be dated 2018 and the envelope with the rollover check from your previous 529 plan needed to have a 2018 postmark. Please note, the eligibility for the state tax deduction is based on when we receive the rollover check – not the completed rollover request form.

  13. Do you have gift cards or gift certificates I could give to my beneficiary to let them know I made a contribution to their account?

    We have both gift cards and gift certificates available for you to notify a loved one that a contribution that was made to their 529 account. We would be happy to mail you what you need, or, you can personalize and print either a card or certificate from our “Give a Gift” page.

  14. I need to take a withdrawal from my account.

    We recommend matching your qualified expenses and 529 withdrawals in the same calendar year for tax purposes.

    To request a withdrawal from an account:

    • Log into your account online and select the “Withdraw” button to walk through the easy steps.
    • Complete and submit the Withdrawal Request Form

    We recommend that you keep all receipts, invoices, or any other documentation of the expenses in the event there are ever questions in the future.  You do not need to provide Bright Start with any receipts when you request a distribution.  If you are ever audited, you will need to provide the documentation of what the withdrawn funds were used for.

    Qualified Education Expenses (as provided in 2018 IRS Publication 970)

    1. The following expenses must be required for enrollment or attendance of a designated Beneficiary at an eligible educational institution.
      • Tuition and fees.
      • Books, supplies, and equipment.
    2. Expenses for special needs services needed by a special needs beneficiary must be incurred in connection with enrollment or attendance at an eligible educational institution.
    3. Expenses for room and board must be incurred by students who are enrolled at least half-time.

      The expense for room and board qualifies only to the extent that it isn’t more than the greater of the following two amounts.

      1. The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student.
      2. The actual amount charged if the student is residing in housing owned or operated by the eligible educational institution.

      You may need to contact the eligible educational institution for qualified room and board costs.

    4. The purchase of computer or peripheral equipment, computer software, or Internet access and related services if it is to be used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible educational institution. (This does not include expenses for computer software for sports, games, or hobbies unless the software is predominantly educational in nature.)