• Held a job from January 2020 – June 2020 in Illinois. I have been paying Illinois state taxes and will be filing Illinois income tax for 2020 for this period.
  • In June 2020, I've moved out of Illinois to Alaska which has no income tax.
  • In July 2020, I've opened up and contributed to a 529 account which is based in Delaware through my employer retirement/brokerage company.

While I am a part-time resident of Illinois in 2020, I was wondering if I can still take advantage of the state's tax deduction by doing the following:

  • Open up a 529 account based in Illinois
  • Rollover the funds from Delaware 529 to Illinois 529 account. Illinois counts this as a tax-deductible contribution.
  • Close Delaware 529 account and contribute into Illinois 529 account.
  • In 2020 Illinois income tax, claim these contributions as deductions.

It seems from the references below, this method seems sound. However, I was wondering if I could get into trouble of claiming an Illinois tax deduction from contributions when I was out-of-state (Alaska). I could probably argue the income I made in Illinois was used to contribute into the Illinois 529.

References:

A 529 Plan would be considered a "qualified tuition program".

https://www.brightstart.com/rollover/

The Illinois Administrative Code provides that in the case of a rollover from a non-Illinois qualified tuition program, the amount of the rollover that is treated as a return of the original contribu­tion to the prior qualified tuition program (but not the earnings portion of the rollover) is eligible for the deduction for Illinois individual income tax purposes.

https://www.brightstart.com/tax-benefits/#js-footnote-ref-1

An individual who files an individual Illinois state income tax return will be able to deduct up to $10,000 per tax year (up to $20,000 for married taxpayers filing a joint Illinois state income tax return) for their total, combined contributions to the Bright Start College Savings Program, the Bright Directions Advisor-Guided 529 College Savings Program, and CollegeIllinois! during that tax year.

submitted by /u/ItsMeYourOtter
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