#43344 - 05/14/08 06:56 PM
How to get state tax credit/deduction
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tinam
Registered: 05/14/08
Posts: 1
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I live in Indiana, but work in Illinois. I pay Illinois state tax first, then take a credit on the Indiana state tax, which covers all but .4%. I thus cannot then take the Indiana tax credit for most of my 529 contributions into an Indiana 529. Can I open an Illinois 529 and get the deduction for that, even though I don't live there? I've seen the requirements worded both ways, as in 'Illinois tax payers can take a deduction' or 'Illinois residents can take a deduction'...
That of course would make my tax liability in Indiana higher, but then could take a higher credit for the Indiana 529?
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#43356 - 05/15/08 03:04 PM
Re: How to get state tax credit/deduction
[Re: tinam]
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Dopps
Registered: 01/23/02
Posts: 1187
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The following language is repeated many times in the Bright Start Program Disclosure Statement & Participant Agreement: "Individuals who file individual Illinois state income tax returns may deduct...". I did not see any language akin to "Illinois residents" when describing the deduction. So, based on this, it appears that you can take an IL deduction for contributions into an IL 529.
To be safe, I sugest you read the Disclosure Statement for yourself. Also, thoroughly check the IL-1040 instructions in the part about 529 deductions and see if it is limited to residents only. Finally, as I am no accountant, you should check with yours, if you have one.
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