Moving mid-year, 529 tax break in both states?

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supersecretname
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Moving mid-year, 529 tax break in both states?

Post by supersecretname » Wed Jun 05, 2019 1:15 pm

I'm moving from MD to VA mid-year. Both states offer a tax break for 529 contributions. I will have to pay tax to both states.

Can I double-dip and claim the break in both states, or only where I reside on 12/31?

EDIT: I think this may work. Found this, which specifically includes part-year residents for MD.
https://taxes.marylandtaxes.gov/Individ ... ions.shtml

EDIT2: Found this. I think that settles it for me with MD. I work in MD also.

" The College Investment Plan does not
have any state residency requirements...
Both residents and nonresidents with Maryland source income are
entitled to a subtraction modification of up to
$2,500 per year per designated beneficiary. "

https://taxes.marylandtaxes.gov/Resourc ... r_it32.pdf

and this non-resident booklet
https://forms.marylandtaxes.gov/current ... ooklet.pdf

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grabiner
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Re: Moving mid-year, 529 tax break in both states?

Post by grabiner » Wed Jun 05, 2019 6:54 pm

Note the comment about "Maryland source income." This applies to non-resident tax in MD; if you have income taxed by MD, you can use the credit for MD 529 contributions. However, if you move to VA and continue to work in MD, you won't pay MD non-resident tax, as VA and MD have reciprocity and do not tax each other's commuters. (You may still need to file MD taxes if you have other income with a source in MD, such as a taxable gain on sale of your MD home.)
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Re: Moving mid-year, 529 tax break in both states?

Post by fabdog » Wed Jun 05, 2019 6:58 pm

Virginia only allows the break for funds deposited to the VA 529 plan. So you will only be able to deduct what you contributed to the VA plan against your Virginia income

Mike

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Re: Moving mid-year, 529 tax break in both states?

Post by LadyGeek » Wed Jun 05, 2019 7:36 pm

This thread is now in the Personal Finance (Not Investing) forum (taxes).
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supersecretname
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Re: Moving mid-year, 529 tax break in both states?

Post by supersecretname » Thu Jun 06, 2019 6:53 am

grabiner wrote:
Wed Jun 05, 2019 6:54 pm
Note the comment about "Maryland source income." This applies to non-resident tax in MD; if you have income taxed by MD, you can use the credit for MD 529 contributions. However, if you move to VA and continue to work in MD, you won't pay MD non-resident tax, as VA and MD have reciprocity and do not tax each other's commuters. (You may still need to file MD taxes if you have other income with a source in MD, such as a taxable gain on sale of your MD home.)
Yeah, so I'll be able to double-dip the year I move, and that's it. Thanks.

vasaver
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Re: Moving mid-year, 529 tax break in both states?

Post by vasaver » Thu Jun 06, 2019 11:11 pm

The Virginia Plan is pretty solid and the fees are very low. Is there a reason you want to make a last minute contributions to the MD Plan?

Maryland Plan (Page 9)
https://maryland529.com/Portals/0/Files ... losure.pdf

S&P 500 - .26%
US Bond - .35%
Extended Equity - .40%
Global Equity - .40%
Treasuries Money Market .43%
Balanced Portfolio - .68%

Virginia Plan (Page 49)
https://www.virginia529.com/uploads/fil ... 1559248760

FDIC Insured - .10%
Total Stock Market - .12%
Total Bond - .13%
Total International Stock - .17%
Inflation Protected Securities - .17%
Conservative/Moderate/Aggressive Funds - .14%

Each year a substantial amount can be contributed
As long as each 4,000 contribution goes into an account with a different owner/investment...

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supersecretname
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Re: Moving mid-year, 529 tax break in both states?

Post by supersecretname » Fri Jun 07, 2019 7:11 am

vasaver wrote:
Thu Jun 06, 2019 11:11 pm
The Virginia Plan is pretty solid and the fees are very low. Is there a reason you want to make a last minute contributions to the MD Plan?
Tax break on MD return. For 3 beneficiaries, it's 600 in tax savings (2500*3*.08). I'm a bit behind, so double-dipping is welcome to me.

MD doesn't recapture, so I have a 529 at vanguard that I have rolled past contributions into in the past. (as an aside, I believe VA does)

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Re: Moving mid-year, 529 tax break in both states?

Post by fabdog » Fri Jun 07, 2019 7:33 am

Yes, Virginia does recapture

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Re: Moving mid-year, 529 tax break in both states?

Post by rollingstones 321 » Fri Jun 07, 2019 7:34 pm

fabdog wrote:
Fri Jun 07, 2019 7:33 am
Yes, Virginia does recapture

Mike
Could you please clarify this? Does that mean that if you move funds in a future year out from VA 529, they claw back the tax deduction? How about if you've moved out of state?

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Re: Moving mid-year, 529 tax break in both states?

Post by fabdog » Sun Jun 09, 2019 8:55 am

If you roll the funds into another states account, they will claw back the taxes you saved. It does not matter if you have moved out of Virginia

As an example, I still have funds for my youngest in a NM 529 plan, even though we have not lived there since 2008. It's not a horrible plan, and I don't want to pay the tax break back

Mike

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