529 Questions (DC)

[Anonymous]

The website isn’t entirely clear on a few points. Thanks in advance.

Question 1: The limit for DC tax deductibility purposes seems to be $4K per account owner per child. So if I’m reading this right, a married couple with two kids could contribute and deduct from DC taxes a total of $16K per year (2 kids x 2 parents x $4k). Is this right?

Question 2: With IRAs you can make a contribution for the prior year up to April 15 of the following year. For example, you can make an 2017 IRA contribution until April 15, 2018. Is this true for 529s? Can I still make a 2017 contribution now?

Question 3: Are there any income limits or phaseouts? Do I get the full tax benefit of my contribution regardless of income level?

Thanks again.

[Anonymous]

1. No, it is $4,000 per kid total deduction per family, not per parent. So if you have two kids, you can contribute $2,000 into each parents account for each kid - $8,000 total.
2. You cannot make a 529 contribution for 2017 now.
3. I think there are no income limits, but don't know for sure.

[Anonymous]

Anonymous wrote:1. No, it is $4,000 per kid total deduction per family, not per parent. So if you have two kids, you can contribute $2,000 into each parents account for each kid - $8,000 total.

This is true but I think confusingly stated. A simpler way to understand this is that the max deductible in a year is $4000 per taxpayer, with a max of $8000 for married filing jointly. Divide it among kids however you want. From the DC 529 website:

"A special DC tax deduction. DC taxpayers can deduct up to $8,000 for married couples filing jointly, who have separate accounts, ($4,000 for individuals) when they contribute to their DC College Savings Plan account.1"

You can also dump money in over that limit and carry over the deductibility for future years. Nice work if you can get it!

[Anonymous]

Anonymous wrote:

Anonymous wrote:1. No, it is $4,000 per kid total deduction per family, not per parent. So if you have two kids, you can contribute $2,000 into each parents account for each kid - $8,000 total.

This is true but I think confusingly stated. A simpler way to understand this is that the max deductible in a year is $4000 per taxpayer, with a max of $8000 for married filing jointly. Divide it among kids however you want. From the DC 529 website:

"A special DC tax deduction. DC taxpayers can deduct up to $8,000 for married couples filing jointly, who have separate accounts, ($4,000 for individuals) when they contribute to their DC College Savings Plan account.1"

You can also dump money in over that limit and carry over the deductibility for future years. Nice work if you can get it!

OP here. Doesn’t the max deductible amount depend on number of kids? Are you saying that a family with 5 kids has the same limit as a family with 1 kid?

[Anonymous]

This is not being stated accurately.
It's $4,000 per child, per adult.
So if you have two children and two parents filing jointly, you can deduct $16k.

[Anonymous]

Anonymous wrote:This is not being stated accurately.
It's $4,000 per child, per adult.
So if you have two children and two parents filing jointly, you can deduct $16k.

Hmm - New poster here. I thought it was $4000 per account up to $8000. So I hold an account in my name for one kid that I contributed $4000 to and my husband has an account in his name for our second kid that he contributes $4000 to.

From their website: A special DC tax deduction. DC taxpayers can deduct up to $8,000 for married couples filing jointly, who have separate accounts, ($4,000 for individuals) when they contribute to their DC College Savings Plan account.1

[Anonymous]

Anonymous wrote:This is not being stated accurately.
It's $4,000 per child, per adult.
So if you have two children and two parents filing jointly, you can deduct $16k.

No you cannot. It's $8k max per couple.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:1. No, it is $4,000 per kid total deduction per family, not per parent. So if you have two kids, you can contribute $2,000 into each parents account for each kid - $8,000 total.

This is true but I think confusingly stated. A simpler way to understand this is that the max deductible in a year is $4000 per taxpayer, with a max of $8000 for married filing jointly. Divide it among kids however you want. From the DC 529 website:

"A special DC tax deduction. DC taxpayers can deduct up to $8,000 for married couples filing jointly, who have separate accounts, ($4,000 for individuals) when they contribute to their DC College Savings Plan account.1"

You can also dump money in over that limit and carry over the deductibility for future years. Nice work if you can get it!

OP here. Doesn’t the max deductible amount depend on number of kids? Are you saying that a family with 5 kids has the same limit as a family with 1 kid?

Yes. The max is $8000 for MFJ. Period.

[Anonymous]

I'm still fuzzy on this one - sorry to drag this out.

We are married, filing jointly. We have 2 kids. We're planning on putting in about $8-10K this year.

Currently, I have a DCCSP account, and in it, I can see each of my individual kids accounts.

Does my wife have to set up a separate DCCSP account in her name and make contributions to get to the $8K max deductible?

[Anonymous]

Anonymous wrote:
Does my wife have to set up a separate DCCSP account in her name and make contributions to get to the $8K max deductible?

Yes.

[Anonymous]

Anonymous wrote:This is not being stated accurately.
It's $4,000 per child, per adult.
So if you have two children and two parents filing jointly, you can deduct $16k.

Not according to my accountant. It is $4k per adult, regardless of number of children. $8k max per couple.

[Anonymous]

Anonymous wrote:

Anonymous wrote:This is not being stated accurately.
It's $4,000 per child, per adult.
So if you have two children and two parents filing jointly, you can deduct $16k.

Not according to my accountant. It is $4k per adult, regardless of number of children. $8k max per couple.

We were equally as confused but called to clarify the details and are now set. We are a married file jointly couple and parents to 4 children. I set up an account for 2 children placing $2k in each ($4k total for 2017). DH did the same for the other 2 children. Collectively, we contributed $8k into 529s in 2017. The deduction in DC taxes helped create a nice little refund which we immediately contributed to the 2018 529 contributions.