Q. We should be able to claim $8,000 state tax deduction thanks to these contributions, shouldn't we?
A. Yes. As you said, the $4000 limit is per beneficiary.
Q. Is there any state tax recapture for the deduction we claim before such a beneficiary change?
A. No. The only recapture is if you withdraw the money for non educational reasons. Another way to look at it: if you contributed $8000 to your daughter's 529, you will be able to deduct $4000 this year and carry over $4000 to deduct the following year. It's the same effect, you get to deduct $8000 either way.
Q. Can we still get Ohio state tax deduction for our passive Ohio income from our Ohio's 529 contribution (when we file tax as part year or non-resident)?
A. Yes. There was a similar question, in this forum, a few days ago. I wasn't sure of the answer, so I asked the question at the Ohio Dept. of Taxation (ODT) web site:
Q. Taxpayer moves from Ohio to another state and makes an Ohio 529 College advantage contribution AFTER the move. Can he claim the 529 deduction on his part year Ohio return?
A. Yes, the deduction is allowed. The key is that the contribution is to an Ohio 529 plan.
