I've been contributing to my sons' 529 accounts for years. Recently I discovered I could view my previous tax returns on the Colorado website https://www.colorado.gov/revenueonline. Strangely, the returns on the site do not match the printed returns from Turbotax. After some research, I was able to determine that the tax returns on the Colorado website are all missing our 529 contributions. My 2021 return was just received recently and I noticed it has the same issue.
I'm worried if they use those returns during an audit, I'm going to be told I owe.
Has any other Colorado residents noticed this? Does the issue lie with the transmission of the form from Turbotax or the reception of the form by Colorado?
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It could depend on how your 529 account is set up.
Per tax.colorado.gov FYI Income 44:
NON-QUALIFYING PAYMENTS AND CONTRIBUTIONS Several types of payments and contributions related to higher education do not qualify for the subtraction. The subtraction is not allowed for: payments or contributions made to 529 savings plans established and maintained by other states; rollovers made from one 529 savings plan to another; payments or contributions made to Coverdell educational savings accounts (ESA); or tuition payments. Additionally, any distribution or withdrawal made from a 529 savings account to pay K-12 education expenses is subject to recapture, as discussed below. In order to avoid recapture, taxpayers should not claim a subtraction for any payment or contribution made to a 529 savings account that is expected to be used to pay K-12 education expenses.
None of these situations apply. This is a Colorado 529 I opened shortly after my kids were born, no rollovers are involved and it's not a Coverdell -- it's a 529. And I haven't withdrawn any money from their accounts.
Even if any of those had applied, it would mean I owe money because I got the full refund. The 529 contributions are on the return I submitted from Turbotax, but not on the return on the Colorado website, yet I got the refund from line 36 of the Turbotax form, not the refund from line 36 on the form from the Colorado website. I would think if the state was purposely removing my 529 contributions from the tax return I signed and submitted, there should be some reason and I would be notified that I owe. I doubt they would remove it and allow me to keep the full amount of the refund.
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