Hi!
Illinois gives deduction for contribution in 529 plan (10k for single payer). TP has contributed 10k and then withdrawn 10k for college fees in the same year.
Question is, should he get tax deduction for contributing 10k while preparing his IL-1040? What is the amount that goes into Sch. M, IL-10 for 529 plan contribution? 10K
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If your client opened a Bright Star 529 savings plan there are no restrictions on withdrawals for qualified education expenses, and he can take up to a $20000 tax deduction (MFJ) even in the same year. see link:
I'm not sure how to read this.
Are you asking about this person's maximum deduction, when they contributed $10K? Or, the maximum amount allowed per the regulation? Typically, you can't deduct more than you contributed. Or, are you trying to net the two events?
Hi all,
I have a related IL 529 question. My client gives/gifts/contributes money to a child's 529 plan by writing a check to the parents. So clearly client is not account owner of the 529 plan. Who deducts the contribution in this case?
Thanks!
Hi There,
IL 529 plan accepts contributions from third party contributors like grandparents. In order to take deduction, you don't have to be account owner. therefore, anyone who contributes can take a deduction.
In your case, grandparents should have invested directly to 529 plan instead of giving a gift check to parents. They can still claim deduction as far as there is no duplication of deduction! All you need is the 529 account number and $$ contributed.
Thank you for the clarification!
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