Deduction for 529 Contribution via UGift

[Thinking44]

In addition to contributions for my own kids, I made a 529 contribution to my nephew's daughter via UGift.  Everything says this should be deductible  in PA.  On the form, TurboTax is requiring the recipient's social security number (XXX-XX-XXXX in numeric only form) even though UGift does not provide it (to allow that info to be kept confidential.)  How do you complete the form when the contribution was made via UGift? 

[Thinking44]

PA Treasury says that the UGift is fine as deductible, I just need to know how to get TurboTax to allow entry?

[Tur06]

I am from Colorado and made UGifts in 2020 for my grandchildren.  Where do I input this info in Turbotax?

[KrisD15]

You may need to verify if the contribution meets the rules for a 529 contribution or a charity contribution. 

It was unclear to me whether UGifts acts as a non-profit charity or as the account administrator for the contributions to the 529 accounts from their website. 

If it is a charity, the contributions would be reported as charitable contributions on the federal return. 

If it is a 529 contribution, you would report that on the state's return if the state offers a credit. 
I suggest you contact UGift for clarification and to obtain their EIN for tax reporting. 

@Thinking44

@Tur06

[Thinking44]

Ugifts acts as an account administrator to allow contributions to be made to individuals, without the recipient having to disclose PII.  Per the Pennsylvania Department of Treasury, this is still tax deductible.  I believe we are supposed to enter the UGift code for the recipient on Pennsylvania Schedule O, however TurboTax mandates a numeric format specific to social security numbers, which does not allow the alphanumeric UGift codes.  Is there an override, or should Schedule O be submitted without the SSN?

[KrisD15]

If you can get the return to be accepted without a social security number for UGift, go ahead that way. 

If it causes an error, try using 999-99-9999 for the number. Be sure to keep your receipt for the contribution with your tax file. 

[SobBeger]

FYI....Answering a question with a question is not an answer.

[SobBeger]

I agree. I've fished around with TT searches and all they refer to for 529b contributions is form 1099-Q. Not very helpful TurboTax

[SobBeger]

Or refer to the interview questions for 529b contributions.  Sorry, not to be found!

[AmyC]

The PA sch O lists SSN as an entry. Without the SSN, you will need to mail the return. 2020 PA Schedule O - Other Deductions (PA-40 O) - PA . The entry for the contribution is made in the PA return. The program asks if you made a Sec 529 Contribution, answer Yes. Then enter the information.

For PA: 
Question: Can the new deduction on Schedule O for IRC Section 529 Tuition Account Program Contributions be taken by nonresidents?

Answer: The answer is yes as long as there is PA source income, the deduction can be taken.

Here's a synopsis of what can or can't be taken regarding this deduction:

1. Mom, Dad, Grandma, Grandpa, taxpayer, spouse, aunts, uncles, cousins, neighbors, friends (just about anybody) can take the deduction for any beneficiary.

2 There is no restriction on the kind of income that is taxable in PA. It does not have to be compensation, but the income has to be taxable to PA.

3. You don't have to be a resident of PA to take the deduction.

4. You can't roll over one plan into another to take the contribution. Rollovers don't count as contributions.

5. As long as the plan permits, you can take the deduction in the same year that a distribution is requested. You can make the contribution one day and take it out the next as long as the plan permits.

6. You can't contribute the $60,000 limit to a beneficiary as per the Federal limitation and take a deductions over the next three years. The deduction can only be taken in the year the contribution is made and is limited to $15,000.

7. The contribution has to be to a Section 529 plan, but does not have to be a PA Section 529 plan.

8. Coverdell Savings plan contributions do not qualify.

9.Taking the deduction will not make a taxpayer eligible for tax forgiveness as the Schedule SP uses Line 9 of the PA-40 in the eligibility income calculation.

@SobBeger

[SobBeger]

Thank you AmyC for your quick response to this PA 529b queation! However, I'm interested in understanding how Wisconsin's 529b deductions are reported within TurboTax  WI state tax forms.  They mention referring to the TurboTax interview questions but I don't see anything in terms of 529b specifically. In addition, all they menion is a form 1099-Q.  That said, when I started to fill out the 529b for my grandaughters WI approved fund, they never ask for my social security number. This last sentence is not your probelem here, but to be honest, the fact Turbo Tax Sate forms don't ask me or refer to 529b info. is of concern.  Can you please provide the exact form number(s) and where in the interview questions I need to submit my WI 529b contributions?  Thank you in advance for your assistance!  

[AmyC]

The information entered goes to WI schedule CS - WI College Savings Accounts. Line 17 shows the allowable subtraction and line 18 will show if you have any excess to carryover. The line 17 amount carries to Schedule SB  line 10. That amount is added in with others to be carried to Form 1, line 4.

There are two kinds of 529 plans and the most common is the 529b. A 529b is a  part of the 529. See Wisconsin 529 College Savings Program for details on the state and 529 treatment. To enter, follow these steps: 

1. go to the summary page, Your 2021 WI taxes are ready for us to check. 
2. Select Income, Edit.
3. Additional WI adjustments? No
4. Here's the income WI handles differently screen
5. Scroll down to education and select College Savings Account, revisit
6. You will probably edit your entry here or create new
7. College savings program, yes
8. enter your grandchild's name
9. select B -contribution to Other's account
10. enter account information
11. enter amount contributed

If you contribute more than you can deduct, you can carryover the amount in excess to the next year. The program handles it for you.

You would not enter your social since it is already in the program as the taxpayer. 

Related:

529a vs 529b Saving for School: 529 Plan Tips - Rootworks