DC 529 tax benefit - is it $8K/year per family, no matter how many beneficiaries??

[Anonymous]

DC 529 tax benefit question - I have two children, I am married.

Can my spouse and I give $8K to EACH of our children and get a tax benefit from it?

Is it $8K total of tax benefit PER jointly filing married couple distributed between all the children, or $8K tax benefit PER CHILD?

I called them and they said it's $8K limit for the tax benefit PER FAMILY, but the customer service rep seemed easily confused with another question I had, so I'm now doubting their advice

Thanks!

[Anonymous]

It's per family, but you can put in up to 40K in one year and claim the deduction over 5 years on your taxes.

[Anonymous]

Per family, but you have to have married filing jointly as your filing status for DC. We always come out better with married filing separately on the same return even though it means we can only get a $4k benefit for 529 contributions.

[Anonymous]

Anonymous wrote:Per family, but you have to have married filing jointly as your filing status for DC. We always come out better with married filing separately on the same return even though it means we can only get a $4k benefit for 529 contributions.

I'm not sure about this...Turbo Tax does all the calculations for us, it concludes we can file separately and claim the full $8,000 deduction.

[Anonymous]

OP here - all great points, thank you!

[Anonymous]

Anonymous wrote:It's per family, but you can put in up to 40K in one year and claim the deduction over 5 years on your taxes.

This is an interesting (in a good way) approach, because you have the benefit of the money growing more when you front load it like this [assuming the entire economy doesn't crash )

[Anonymous]

It's per family, as PPs have noted. If you file separately on the same return, which we always do because the tax owed winds up being lower, you can still claim the full amount if you have two separate accounts -- you each put in $4,000 and each claim the full deduction. (I am not a tax attorney, or an attorney of any kind, so maybe take this advice for what it is, i.e., an Internet stranger's random opinion, but TurboTax has never given me a hassle filing that way, nor has the D.C. government.)

[Anonymous]

Anonymous wrote:It's per family, as PPs have noted. If you file separately on the same return, which we always do because the tax owed winds up being lower, you can still claim the full amount if you have two separate accounts -- you each put in $4,000 and each claim the full deduction. (I am not a tax attorney, or an attorney of any kind, so maybe take this advice for what it is, i.e., an Internet stranger's random opinion, but TurboTax has never given me a hassle filing that way, nor has the D.C. government.)

Do you file separately for DC only and then jointly for federal taxes? I also found that filing separately is better for us in DC, but definitely not better federally.

[Anonymous]

Anonymous wrote:

Anonymous wrote:It's per family, as PPs have noted. If you file separately on the same return, which we always do because the tax owed winds up being lower, you can still claim the full amount if you have two separate accounts -- you each put in $4,000 and each claim the full deduction. (I am not a tax attorney, or an attorney of any kind, so maybe take this advice for what it is, i.e., an Internet stranger's random opinion, but TurboTax has never given me a hassle filing that way, nor has the D.C. government.)

Do you file separately for DC only and then jointly for federal taxes? I also found that filing separately is better for us in DC, but definitely not better federally.

Yes--you can do MFJ for federal and separate for DC. Have done this for years.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's per family, as PPs have noted. If you file separately on the same return, which we always do because the tax owed winds up being lower, you can still claim the full amount if you have two separate accounts -- you each put in $4,000 and each claim the full deduction. (I am not a tax attorney, or an attorney of any kind, so maybe take this advice for what it is, i.e., an Internet stranger's random opinion, but TurboTax has never given me a hassle filing that way, nor has the D.C. government.)

Do you file separately for DC only and then jointly for federal taxes? I also found that filing separately is better for us in DC, but definitely not better federally.

Yes--you can do MFJ for federal and separate for DC. Have done this for years.

Same here.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's per family, as PPs have noted. If you file separately on the same return, which we always do because the tax owed winds up being lower, you can still claim the full amount if you have two separate accounts -- you each put in $4,000 and each claim the full deduction. (I am not a tax attorney, or an attorney of any kind, so maybe take this advice for what it is, i.e., an Internet stranger's random opinion, but TurboTax has never given me a hassle filing that way, nor has the D.C. government.)

Do you file separately for DC only and then jointly for federal taxes? I also found that filing separately is better for us in DC, but definitely not better federally.

Yes--you can do MFJ for federal and separate for DC. Have done this for years.

This is all correct. I think filing separately ON THE SAME RETURN for DC taxes is best in most cases. You get the full $8,000 deduction but afaik each spouse needs to contribute to their own DC 529 (the accounts can have the same beneficiary though). The max deduction is $4000 per individual tax payer ($8,000 for married couple), regardless how many dependents or 529 accounts you contribute to. Contributions must go to a DC 529, not another state.

Same here.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's per family, as PPs have noted. If you file separately on the same return, which we always do because the tax owed winds up being lower, you can still claim the full amount if you have two separate accounts -- you each put in $4,000 and each claim the full deduction. (I am not a tax attorney, or an attorney of any kind, so maybe take this advice for what it is, i.e., an Internet stranger's random opinion, but TurboTax has never given me a hassle filing that way, nor has the D.C. government.)

Do you file separately for DC only and then jointly for federal taxes? I also found that filing separately is better for us in DC, but definitely not better federally.

Yes--you can do MFJ for federal and separate for DC. Have done this for years.

Same here.

Sorry, posted as a quote above:
This is all correct. I think filing separately ON THE SAME RETURN for DC taxes is best in most cases. You get the full $8,000 deduction but afaik each spouse needs to contribute to their own DC 529 (the accounts can have the same beneficiary though). The max deduction is $4000 per individual tax payer ($8,000 for married couple), regardless how many dependents or 529 accounts you contribute to. Contributions must go to a DC 529, not another state.

[Anonymous]

These "per family" references are a bit misleading.

One person can claim one $4,000 tax benefit so long as the person owns the account. If, in a two-parent household, each parent owns a 529 account, each is entitled to the $4,000 benefit.

One parent cannot own two accounts and then claim an $8,000 tax benefit.

[Anonymous]

Anonymous wrote:These "per family" references are a bit misleading.

One person can claim one $4,000 tax benefit so long as the person owns the account. If, in a two-parent household, each parent owns a 529 account, each is entitled to the $4,000 benefit.

One parent cannot own two accounts and then claim an $8,000 tax benefit.

Exactly - thanks for clarifying this.

[Anonymous]

Anonymous wrote:

Anonymous wrote:These "per family" references are a bit misleading.

One person can claim one $4,000 tax benefit so long as the person owns the account. If, in a two-parent household, each parent owns a 529 account, each is entitled to the $4,000 benefit.

One parent cannot own two accounts and then claim an $8,000 tax benefit.

Exactly - thanks for clarifying this.

Unless it is for 2 different children.