Reply to Tuition reimbursement through a 529 and Virginia tax benefit in the same year

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[quote=Anonymous][quote=Anonymous][quote=Anonymous][quote=Anonymous]The Virginia tax deduction is on contributions to a 529.

Virginia doesn't care how you spend the contribution. [/quote]

You shouldn’t listen to those person. Many states require you hold it in the account for a year, or some other timeframe to get a legal deduction.[/quote]

Not a Virginia resident, so have not researched this.  Can you cite the relevant restrictions in Virginia?  In DC the only way a deduction can be recaptured is if you make a non-qualified withdrawal or make a rollover to another state 529 within the first 2 years of opening the account.  After that period is over, there is no deduction recapture possible.

https://www.dccollegesavings.com/home/about/tax-benefits.html[/quote]

Here is the relevant VA Code:

https://law.lis.virginia.gov/vacode/title58.1/chapter3/section58.1-322.03/

7a:

"...any deduction taken hereunder shall be subject to recapture in the taxable year or years in which distributions or refunds are made for any reason other than (i) to pay qualified higher education expenses, as defined in § 529 of the Internal Revenue Code or (ii) the beneficiary's death, disability, or receipt of a scholarship. "

So you are subject to recapture if you use the money for non-qualified expenses, that's it.  No time requirements that I can see.  If you use the money for qualified higher education expenses, you won't get recaptured.[/quote]

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