I just did my taxes this weekend with TurboTax, and I was pleasantly surprised to find out that Arizona residents may deduct their contributions to ANY state 529 plan, NOT just an Arizona plan!
I know, I know, I should have known this before I started my Ohio CollegeAdvantage 529 Plan. I just assumed that you only got the state tax deduction if you invested in a 529 plan from a state that you lived in, and since the Arizona options were so poor, I didn’t even give the state tax deduction a second thought. The money I’ll be saving in lower fees over time will outweigh any state tax deductions I could receive from a plan with high management fees and/or limited investment options. But taking advantage of BOTH low fees AND state tax deductions is the best of both worlds!!
Through 2012, Arizona taxpayers may deduct contributions to ANY 529 plan of up to $750 for a single or head of household or $1,500 for a married couple per year. We’re one of only 5 states (Pennsylvania, Arizona, Maine, Kansas and Missouri) that have this privilege!
So, if you live in Arizona and you took advantage of the Ohio CollegeAdvantage 529 sign up bonuses, make sure to deduct any contributions you made from your state taxes. This is even more incentive to give contributions to a 529 plan as a gift!
I had $250 in contributions to my 529 last year, which reduced the state taxes that I owe by an extra $11. Every little bit helps!