Is my 529 contribution tax deductible?

Question

My wife and I recently had our first child, and about the same time I began a new job in New York City. Naturally my wife and I want to start saving for our daughter's education, so we would like to make a contribution to a 529 plan. We researched enough to discover contributions to NY state sponsored plans are tax deductible if you have NY-derived income (as mentioned here).

Here is the wrinkle. My income is from New York while my wife's income is from New Jersey (we both live in NJ). If we file our taxes as 'Married Filing Jointly', will my 529 contribution still be tax-deductible? Thank you for any help on this manner. I already emailed our tax accountant this question but he never answered (I am not sure if he knows; this question appears to not be easy to answer).

Answer 1

Here's another wrinkle: neither New York nor New Jersey are community property states. So, your wife's income is her, your income is yours, and they're not related. You can just spend it together and give it to each other with no consequences.

So if you are contributing from your income - I believe you can claim it as deductible in New York. If your wife is contributing, from her income - you cannot. If you both are contributing - I'd suggest some splitting rules, and portion attributed to you (say, for example, 50%) will be deductible.

Run this through your tax adviser, of course.