How much to enter for 529 contribution in case of front loading ?

[gauravdhiman]

This question is in relation to AZ state tax.

I have two daughters and I front loaded their 529 plan with 75K and 50K in 2021. While entering details of 529 contributions in AZ state tax, shall I enter the actual contribution amounts (75K and 50K) or should I enter 4K each as 4K is the max deduction per 529 account in AZ ?

When I enter actual contribution amounts, TT complains and shows below message while validating the state taxes.

If I enter 4K in 2021 as suggested by TT, then my question is how can I claim deductions for next 4 years as front loading allows deductions for 5 years. Next year (2022 and onwards) I will not be contributing more amounts to 529, so in that case, will I still enter 4K for next 4 years (2022 to 2025) ? Please suggest the right way to enter contribution for AZ and claim the deductions for next 4 years too.

[Anonymous_]

@Hal_Al ?

[Hal_Al]

I'm not specifically familiar with AZ 529/QTP deduction rules.  Most states allow a rollover of excess current year 529 contributions to following years for deduction.  A quick internet search seems to indicate that AZ does not allow a rollover.  Neither the AZ 529 site or the AZ DOR site address the issue.  That lack of guidance and the fact that TurboTax won't let you enter more than $4000 makes me think it's not allowed.  

You may want to call AZ DOR (Dept. of Revenue) to get a specific answer and/or raise the issue. It sounds like an oversight to me. The deduction rule appears to be fairly new.