If you are considering starting a savings program so that you or a loved one can attend college, you should definitely investigate your 529 options. Section 529 of the tax code stipulates that you can save a certain amount of money out of your income for education at a low- or no-tax rate. Furthermore, these savings can be invested in a variety of ways to garner more and higher interest to help you with future tuition bills.

Of course, like most things in the US tax code, 529 comes with lots of complicated information and hoops to jump through. In fact, many people find it so intimidating that they simply elect to have a financial advisor handle their investing for them or throw their money in a traditional savings account. Both of these things are bad ideas, since a financial advisor will often take a commission as large as 5 percent of your total earnings and a conventional savings account will earn – at best – less than half of what a 529 can. However, in order to make the best 529 decision, you do need to know your options, and one of the best options for many people is the “home court” advantage.

Having the home court advantage in 529 investing means that you invest using one of your home state’s plans. Often, home state plans include state tax benefits. You can save money on taxes and, in some cases, put away money entirely tax-free. States may offer tax deductions on part or all of contributions, while others may provide matching contributions up to a certain dollar amount. Some will even provide bonuses of 200 dollars or more when you open an account.

Of course, it will pay off for you to crunch the numbers before you determine just how big an advantage the “home court advantage” really is. You will need to factor in limitations on deductions, limitations on contributions and evaluate fees. Also, you will need to realistically examine how much you can save a year. In some cases, if you are saving over about 1000 dollars a year, you may not be eligible for tax breaks or “sign up” bonuses. In these instances, you may not really benefit from using an in-state plan.

If you want to run the numbers yourself, try using the NASD’s 529 Plan Expense Analyzer. It will tell you how your investment will grow in two different plans, given their annual costs, projected rates of return and the potential tax breaks. This tool is a great way to determine just what you are getting by taking your own advantage of the “home court” advantage.