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  • If I roll $7,500 into the Alabama 529 Savings Plan (contributions/basis equals $6,000 and the earnings portion equals $1,500), can I deduct the full $7,500 on my tax return or only the amount I contributed?
View All 529 Savings Plan, Income Tax FAQs

If I roll $7,500 into the Alabama 529 Savings Plan (contributions/basis equals $6,000 and the earnings portion equals $1,500), can I deduct the full $7,500 on my tax return or only the amount I contributed?

The full amount contributed into the 529 Plan can be deducted up to $5,000 per taxpayer. If you file Married filing Joint on your tax return, the maximum amount of $10,000 can be deducted.

Related FAQs in 529 Savings Plan, Income Tax

The postmark date will be accepted as the date of the contribution, as long as it is on or before December 31st. The contribution does not have to be received by the plan on or before December 31st.

Yes, once the withdrawal is made, it would be taxable on your Alabama income tax return.

No, the money is not taxable as long as the money is used to pay for higher education expenses.

No deduction would be allowed on your Alabama income tax return, and the income would be reported once it is withdrawn or distributed from that other state’s plan.

Yes, the amount withdrawn is added back to the contributing taxpayer’s return, plus a 10% penalty.

The rollover is exempt from Alabama income tax.