Income Tax Information UESP is a qualified plan under section 529 of the Internal Revenue Code. As a result, UESP can offer participants state and federal tax incentives. Each Utah income taxpayer is entitled to a deduction for contributions to a UESP account. Grandparents, aunts, uncles, and others may also receive the full deduction if they establish accounts. As in the past, none of the investment earnings will be taxed by the state as long as the money is used for qualified higher education expenses at eligible institutions.
All income is also free of Utah income taxes.
If you are a UESP participant, you will receive state tax form TC-675H by January 31 of the new year. When completing your federal income tax return do not include the earnings from your UESP account. Refer to line 5 on the TC-675H form for the total amount of account earnings. Earnings will not be taxed until they are paid out of your UESP account. At that time, such earnings will be taxable to the beneficiary if the distribution is used for qualified educational expenses.