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I live in NY, but I work in CT. Both states allow you to deduct up to $5000 of 529 contributions to their plan.

Based on what I've read, I need to pay taxes to both states, and then I get the amount I paid to CT as a nonrefundable credit to my NY taxes.

Does this mean that contributing to a CT 529 just means that I will pay more to NY later? And if so, would my best option be contributing a bit to each state's 529 so that my tax amount is equal for both states?

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  • Since your NY taxes will be higher than CT taxes wouldn’t you want to do the NY 529? Sep 2 at 23:18
  • @MichaelSesser NY's 529 plan (I can't speak to CT's) requires you to pay back the deduction if your child doesn't go to school in NY, so that might not necessarily be the right call if you anticipate the kid going to school in CT or elsewhere.
    – ceejayoz
    Sep 3 at 1:46
  • @ceejayoz I don't believe this is true. nysaves.org/home/basics-of-529s/529-basics.html "although you'll be investing in a 529 plan sponsored by the State of New York, the student can attend any eligible educational institution in the United States or abroad." I actually followed through with this using the NY plan, and when withdrawing for my non-NY school, the website said that it was a qualified expense. (Context: I'm actually the student here as well, and used the 529 to pay less tax during an internship)
    – Daniel M.
    Sep 3 at 2:08
  • @DanielM. Sorry, it looks like you're right! That's a bit of a relief for me.
    – ceejayoz
    Sep 3 at 14:02

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