Virginia 529 plan over 70 deduction

[mactoolsix]

I have tried to research the Virginia Revenue code, but haven't been able to find the relative section.

Virginia client contributed several years to a 529 plan. Now realizes it is deductible for Virginia. He is 74, and the Virginia 529 plan website says:

For account owners age 70 or older: the entire amount of any contribution may be deducted in the year contributed or in a future year. If the account owner turns 70 and has contributions to deduct as a result of contributions made prior to attaining age 70, all of these remaining contributions may be deducted in full in the year the account owner reaches age 70.

May he now deduct the unclaimed contributions at age 74? I'm concerned with the phrase "in the year the account owner reaches age 70."

[mastertaxguy]

Yes, virginia, there is a 529 plan deduction

From the Commonwealth of Virginia tax department web site:

104 Virginia College Savings Plan Prepaid Tuition Contract Payments and Savings Account Contributions - If you are under age 70 on or before December 31 of the taxable year, enter the lesser of $4,000 or the amount paid during the taxable year for each prepaid tuition contract or a savings trust account entered into with the Virginia College Savings Plan (previously called the Virginia Higher Education Tuition Trust Fund). If you paid more than $4,000 per contract or account during the year, you may carry forward any undeducted amounts until the purchase price has been fully deducted. If you are age 70 or older on or before December 31 of the taxable year, you may deduct the entire amount paid to the Virginia College Savings Plan during the year

[mactoolsix]

From the Commonwealth of Virginia tax department web site:

104 Virginia College Savings Plan Prepaid Tuition Contract Payments and Savings Account Contributions - If you are under age 70 on or before December 31 of the taxable year, enter the lesser of $4,000 or the amount paid during the taxable year for each prepaid tuition contract or a savings trust account entered into with the Virginia College Savings Plan (previously called the Virginia Higher Education Tuition Trust Fund). If you paid more than $4,000 per contract or account during the year, you may carry forward any undeducted amounts until the purchase price has been fully deducted. If you are age 70 or older on or before December 31 of the taxable year, you may deduct the entire amount paid to the Virginia College Savings Plan during the year

Awesome! Do you happen to have a website address so we can document that in our files?

Awe - just found it THANKS!!

[Burke]

The relevant code section is VA 58.1-322. This details all subtractions. (There are a lot.) Anyone doing VA returns should review it.

[FEDUKE404]

Proceed carefully

The relevant code section is VA 58.1-322. This details all subtractions. (There are a lot.) Anyone doing VA returns should review it.

Virginia indeed has a boatload of "subtractions." I almost missed such for a public employee (?) who makes less than a certain dollar amount in wages. Henceforth, I make it a point to work through the tax software Q&As for that section, reading each one carefully.

One caveat re the original question: It appears the special (unlimited) exclusion works only for 529 payments made starting at age 70. Perhaps you can "clear the books" once >70 YOA. Also note if the 529 plan was not the Virginia plan, he might be out of luck. Research carefully!

The Commonwealth can be very tricky in their wording. For instance, Virginia allows a limited deduction for political contributions. Nice! Your political tilt is X so you give the maximum to the X National Party. Surprise....you can only deduct funds that went to *Virginia* candidates for public office. Insert fudge factor, OR just "support your local politician."

Now, back to our regular programming. . .

FE

[Burke]

Yes, bad news is, it is complicated. Good news is, hardly anyone over 70 pays any taxes. I wonder how much benefit the big subtraction would be to said taxpayer. It might be better to amend the old returns and carryover each year the excess of $4K per person.

[Burke]

The Commonwealth can be very tricky in their wording. For instance, Virginia allows a limited deduction for political contributions. Nice! Your political tilt is X so you give the maximum to the X National Party. Surprise....you can only deduct funds that went to *Virginia* candidates for public office. Insert fudge factor, OR just "support your local politician."
FE

It's hardly worth the trouble sometimes. It's only $25. And its a credit, not a deduction. Don't forget about those! There are five pages of the credit form.

[FEDUKE404]

Virginia Political Contributions Credit

It's hardly worth the trouble sometimes. It's only $25. And its a credit, not a deduction. Don't forget about those! There are five pages of the credit form.

Well, kinda. . .

It is indeed a tax credit....my bad....slip of my tongue (typing fingers).

However, as relates to the "five pages": If the only credit you have is the Political Contributions Credit, you are allowed to put that allowable amount on line 23 of VA Form 760 without any of the supporting VA Sch CR paperwork. It's an easy entry for the VA client who qualifies.

FE

[Burke]

You are correct. That was a recent change after a lot of complaints to the Dept of Taxation.