If married filing separately on same return in DC, are you limited to a total deduction of $4,000 for 529 contributions (ie not $8,000)?

Forum|Forum|7 years ago
June 3, 2019
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My wife and I both live in DC and each contributed $4,000 to separate 529 plans for our child (i.e., a total household contribution of $8,000). We're filing as "married filing separately on the same return," as that seems to give us the lowest overall state tax. It looks like Turbo Tax is limiting us to a total of $4,000 in 529 contribution deductions, not $8,000. I know that if married filing jointly, we could deduct a total of $8,000 in 529 contributions (but it overall doesn't make sense to change the filing status). I gather for some reason that doesn't apply to married filing separately on the same return? I'd appreciate if anyone has a good explanation for this, as we might change our 529 contributions going forward. Thanks!

TurboTax Deluxe Online

BD111Author

Level 2

This post has been deleted.

This worked perfectly, thanks!

hrlpetworth

Level 2

It depends on how you filed your DC returns. According to the Instructions published by the DC Dept of Revenue:

If you are filing separately you have a max of $4,000, but can carry over your contributions for up to five years. If you filed separate on a combined return, you will both get the $4,000

If you are married and file a joint or combined separate return, each spouse/registered domestic partner may deduct up to $4,000 for contributions made to all accounts for which that spouse/registered domestic partner is the sole owner.

Contributions made to one or more accounts in excess of the allowable $4,000 ($8,000 for eligible joint filers) annual deduction may be carried forward as a deduction (subject to the annual limitation) for up to five years.

@rfs13

I think that everyone on this thread understands the law. What seems to be impossible is to take advantage of it using the Turbotax software, as Turbotax only allows the couple filing "separately on the same return" to deduct a total of $4000.