New York State Tax Form IT-201 line 30 allows up to $5,000 per resident ($10,000 if married filing jointly) in tax deductions.
IRS Form 709 allows superfunding a college saving account up to five years in advance, or $70,000, and have it treated as if I contributed over the course of five years.
As an NY resident with a NY plan, if I wanted to contribute $70,000 for one year, how should I go about it? I could think of several scenarios, but not sure how it precisely works:
I would individually file Form 709 for $70,000. After filing IT-201 jointly, we only get $5,000 in tax deductions because by filing form 709, I've explicitly stated that the contributions came from an individual. The superfunding is eligible for the tax deduction for the first year only. Over the course of five years, we only get a total of $5,000 in tax deductions.
I would individually file Form 709 for $70,000. After filing IT-201 jointly, we somehow get $10,000 in tax deductions even though form 709 explicitly stated that it came 100% from an individual. Also the tax deductions for subsequent years are obtained from the superfunding. Over five years, we get a total of $50,000 in tax deductions.
I would individually file Form 709 for $65,000, while my wife would contribute $5,000 of the $70,000 total. Filing IT-201 jointly, we get $10,000 in tax deductions (wife's $5K + my $5K from superfunding). Also, she can continute to contribute within the limit for the following years, since she didn't file the form 709 and is not restricted by a previous year's form 709 filing. For a period of five years, we get $30,000 in tax deductions ($10,000 for the initial year, $20,000 for the folloing four years).
Does this question make sense? Depending on how I interpret it, we are eligible for either $5,000, $50,000, or $30,000 in state income tax deductions.