College choice 529 credit not calculating correctly

[sstanski]

I contributed a total of $5,000 into College Choice 529 plans in 2016.  The Indiana credit is 20% of your contribution up to $1,000.  $5,000 x 20% = $1,000. Therefore I should be eligible for a full $1,000 credit.  However, Schedule IN -529 is limiting the credit to IT-40 line 8, which is State adjusted gross income.  However, according to College Choice, there is no income limitation.  Can you please help?  Thank you.  

[Fern · Accepted solution]

The credit given for 529 fund contributions is not a refundable tax credit. That means once your tax liability has been reduced to $0, you will not get any further credit for the contribution.

In your case, the amount of tax you owe is less than $1,000. Your credit is limited to the amount of taxes you owe (as reported on line 8 on the IT-40.)

See pages 2 and 3 of the State of Indiana Information Bulletin.

http://www.in.gov/dor/files/ib98.pdf