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#32018 - 06/26/01 05:27 PM Questions about state taxes
jon.roth
Registered: 06/26/01
Posts: 1
I'm trying to figure out why Savingforcollege.com gives some plans a lessor rating for non-resident participants then in state participants. Sometimes it's very obvious and other times not.

The real question is in regards to state taxes. If I participate in another states plan, do I have to pay state income tax to that state when I withdrawal the monies... if they do not impose state tax on their own residents who participate, and if they do impose state tax on their own residents who participate?

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#32019 - 06/26/01 06:35 PM Re: Questions about state taxes
Joe Hurley Administrator
Registered: 01/07/00
Posts: 2080
I'm not aware of any state that will attempt to tax you because you invest in its 529 plan, assuming you have no other reason to file taxes in that state. You will still be subject to the income tax rules in your own resident state, however.

A lot of states provide a tax break for residents who participate in their program and this is factored into the ratings.

Joe

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