- NY does require you to work through your records and report based on what you know. If you receive a distribution for which you did not take the deduction, it is not taxable. NY is taxing dollars not previously taxed. If you put money in and did not get to reduce your NY tax bill, then that money has been taxed so only earnings on that money would be taxable.
- Inherited accounts are presumed to have been deducted from taxes, therefore, taxable unless you have the paperwork to prove otherwise.
NYs 529 plan book states: For New York State taxpayers, Qualified Rollovers will be subject to New York State income taxes on the earnings portion, as well as the recapture of any previous New York State tax deductions taken for contributions to the Account. See Section 7. Important Tax Information—New York State Tax Information.
Then page 36, where section 7 simply says:
Because it is your responsibility to verify contributions, withdrawals, and transfers, it is important for you to keep all records, invoices, and other documents regarding your Account to support: • Expenses that you claim to be Qualified Higher Education Expenses, K–12 Tuition Expenses, Apprenticeship Program Expenses, or Qualified Loan Repayments. • Withdrawals because of the death or Disability of, or receipt of a Qualified Scholarship by, your Beneficiary. • The earnings component of and compliance with the timing requirements applicable to Qualified Rollovers. • The earnings component of contributions funded from Qualified U.S. Savings Bonds or education savings accounts. • Refunded Distributions.
@DanJ6669
@billm1123 For your last question, remember, this is a big paperwork trail. If NY asks, you will provide the paperwork trail to show what is taxable or not. When you claim your daughter's distribution, determine what proof you have to support your argument.
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