On my NYS income tax it asks what I paid for college tuition. Well, I paid my son's tuition bill, but I made the payment out of a 529 plan he owns; but of course he is my dependent. For income tax purposes did I pay it?
Because you used a 529 plan you don't get a tax deduction, such as the AOC, lifetime learning credit, tuition and fees deduction, etc on the that amount. You can still use these education credits for other amounts paid for out of pocket.
Yes. See the NYS instructions for form IT-272
The question was about NY state income taxes, not federal. That said, your answer for federal purposes is not accurate. You can't get a double benefit by using the same qualified expenses for determining the taxable part of a QTP distribution and again for computing the AOTC or LLC or T&F deduction. That does not mean that using a 529 plan to pay qualified expenses prevents you from obtaining one of the other benefits. In fact, as the AOTC is the best benefit, it is always in your best interest to maximize that amount by paying the qualifying expenses any way you can. E.g., You withdraw $5000 from a QTP and pay $4000 of qualified expenses. This triggers a $2500 tax credit of which $1000 is refundable. If some part of the QTP distribution included earnings, then none of the $4000 of expenses could be used in determining the taxable portion.
Great! I don't really understand why, but according to the tax software I save $4,000. Seemed too good to be true.
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