Can I deduct Maryland college Investment Plan contribution if I received the state contribution?

[AmyC]

Yes, you can subtract "An amount included in federal AGI contributed by the state into an investment account under section 18-19A-04.1 of the Education Article during the taxable year. This includes amounts included in federal AGI contributed by the state into an investment account under the Maryland College Investment Plan"

[SKjames]

Where in the federal return would you declare/list said state contributions to MCIP so that they are included under your federal AGI? (I've looked for several years and never found such an option.) 

[ErnieS0]

Nowhere. There is no federal deduction for Maryland 529 contributions. This is a state-only benefit @SKjames. That's why it's only entered in the Maryland section.

Maryland 529 college savings plans are the only 529 plans that offer a Maryland State income deduction each year for your payments or contributions to the plans.

Tax Advantages & Benefits of 529 Plans

[Murt]

There are two different types of contributions to Maryland 529 plan:

1) There are contributions that account holders can make.

2) If certain conditions are met, the state of Maryland also makes contributions to 529 plans.  The contribution amount from state of Maryland could be $250 or $500.

Please see here for more details: https://maryland529.com/Save4College/State-Contribution-Program/Contact-Us

Is the amount that the state of Maryland contributes to account holders' MD 529 plan (either the $250 or $500) considered income for federal tax purposes? If yes, where do we list it as income in the federal section?

Secondly, is that state contribution considered income for state tax purposes? I think the answer to this 2nd question is no, but just want to confirm.

Since this is a contribution from state of Maryland, a 1099-Q form is not provided, because a 1099-Q is for distributions.

Thank You

@ErnieS0 

[DaveF1006]

These are neither taxable on the federal or state income tax level. Just remember not to claim the State of Maryland's portion of the contribution deductible when you prepare your Maryland return.

[do30red]

Where can I find it. Nothing in the MD tax return section can be found or "popped up".

[DaveF1006]

Yes, if you made a contribution with your own money, you can claim up to $2500 for the amount of the contribution is certain conditions apply.  Be sure not to include any state contribution made on your behalf. To make.

1. Select the state taxes tab in your return.
2. Go to the page that says Here is the income Maryland Handles Differently
3. Go to Education
4. Go to Maryland Savings Plans Contributions
    

[SKjames]

Info on the MD529 website directly contradicts this. It says that if you receive any State contribution ($250 or $500), you are not eligible for state tax deduction for MD529 contributions that you make for that year and thus should not list your MD529 contributions on your state return that year. Here's the specific verbiage:

If you receive a State contribution for any account in a given year, you are not eligible for the income subtraction on your State taxes for contributions that you made to that or any other Maryland College Investment Plan account in that year. Current Investment Plan account owners who do not receive a State contribution, however, are still eligible to receive a Maryland income subtraction of up to $2,500 per year, per beneficiary for contributions made to the account.

https://maryland529.com/home/save4college.html (Found in the FAQs)