I am by no means very knowledgeable on 529 deductions on state tax returns. That's mostly because I live in a state that does not tax personal income. But while reading through the post and the response, it raised a question with me, and I'm not even sure it's a valid question. But here goes.
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.
If the contributor has no income that is taxable by the state of Ohio, then am I correct in assuming there is nothing to deduct from Ohio state income? It is stated that there is "passive" income from the state of Ohio that will have to be reported to that state. But can that contribution be deducted from passive income? I don't know, so that's why I bring it up in case it was something overlooked originally. Plus is that passive income is from long term residential real estate, will there actually be a taxable profit on the state tax return that will benefit you by deducting the 529 contribution from it? I ask, because it's not all that common for long term residential real estate to actually show a taxable profit "on paper" at tax filing time - especially if there is a mortgage on the property.
Then there's the question of the state you are moving to. Will the new state be your new tax home? If so, does that state tax personal income? If so, does that state allow a deduction for 529 contributions to an out of state plan? If so, then obviously you can't double dip. but will claiming the deduction on the "new" state return (if allowed) be more tax advantageous than claiming it on the "old" state return?
If the new state will be your new tax home, then that means you would be filing a part year resident return for OH for the period of the year you lived there, as well as a part year resident return for your new state if that new state taxes personal income. Does this have an impact on what you're "allowed" to claim?
Again, I don't know the answers to these questions. But it's questions I would probably be asking were I in your situation.
