Pennsylvania Nonresident return 529 deduction

[yz493]

Hi there,

My wife and I are married filing jointly. We live in NC so we file in NC as residents. My employer is in PA so every year I file PA state return as a non-resident. Recently we started looking at college saving for our kids. In PA,  taxpayers can deduct contributions to the 529 plan from their Pennsylvania taxable income up to $15,000 per beneficiary, per year. My question is: does that apply to non-resident?

Another related question, if it does, how can I claim the tax credit/deduction in my PA state return using TurboTax?

[KrisD15 · Accepted solution]

No.

The deduction allowed on the Pennsylvania tax return (PA-40) is for a PA529 Plan only, and in order to open a PA529, one needs to be a resident. 

The instructions for the PA-40 are not very clear in stating the type of plan or taxpayer that may claim the credit, but research on the PA-529 makes it clearer that the credit is for the state administered plans exclusively. 

(There is specific reference to a PA259 on PA Schedule O page 10-

"REMINDER: Include the amount of any IRC Section 529 contribution reported and made from the immediately preceding tax year’s PA-40 Schedule P, Refund Donations to Pennsylvania 529 College Savings Program Accounts.")

PA Schedule O

North Carolina, for tax year 2021, does not offer any state credit for 529 Plan contributions. 

FAQ about PA 529 plans

[yz493]

Got it. Thank you! Happy New Year!