NY State Tuition Deductions Perks

NY State Tuition Deductions Perks Image

NY State Tuition Deductions Perks

Double-dipping, which is being able to benefit from the same expense at various times, does not happen often; however, it is allowed for educational expenses.  To take advantage of this, taxpayers must utilize IRC Section 222 above-the-line deduction for undergraduate tuition,as well as make a contribution to New York’s 529 plan for a Qualified Tuition Program.  In order to use the same expense, taxpayers must contribute any available cash to a 529 plan, and then withdraw funds that were contributed to this plan in prior years to pay the qualified tuition expense.  By doing this, the taxpayer can utilize the section 222 above-the-line deduction, the New York adjustment for the contribution to the 529 plan, as well as the itemized deduction for qualified tuition expense.
The above information is of a general nature only and should not be relied upon for specific situations. Specifically the above discussion only dealt with U.S. resident individual S-corporation shareholders previously having C-corporation earnings and profits.
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