topic Which State do I owe taxes to for non-qualified 529 withdrawals? in Education

Which State do I owe taxes to for non-qualified 529 withdrawals?

mccerd — Sun, 13 Feb 2022 20:20:54 GMT

I have a 529 plan that is sponsored by Rhode Island and I made after-tax contributions while living in Georgia. This year I withdrew all of the money as a non-qualified withdrawal. Do I owe taxes on the investment returns to Rhode Island or Georgia or both?

Re: Which State do I owe taxes to for non-qualified 529 withdrawals?

LenaH — Sun, 13 Feb 2022 20:40:09 GMT

You will only owe tax to the state of Georgia (your resident state). Your resident state taxes you on all of your income. The earnings portion of this type of withdrawal will be subject to tax, including the additional 10% federal tax.

Rhode Island is simply the state that operates the 529 plan. You do not owe taxes to Rhode Island.

Re: Which State do I owe taxes to for non-qualified 529 withdrawals?

mccerd — Sun, 13 Feb 2022 21:15:03 GMT

Thank you!