Sorry, wasn't around much on Sunday
To deduct your loss,
your entire 529 account would have to be liquidated. In other words, you can’t simply liquidate the individual fund inside the 529 that is in the red. "All 529s in the same state plan and with the same owner and beneficiary would have to be aggregated" and closed out.
You would not enter your 529 loss on your federal income tax return in the same section where you list your investments gains and losses. Instead, it goes under the heading of "Miscellaneous Itemized Deductions." Which means you have to itemize when you file your taxes. In addition, you only see a tax benefit to the extent that all of your Miscellaneous Itemized Deductions exceed 2% of your adjusted gross income (AGI).
For instance, if your AGI is $100,000 and the only item under Miscellaneous Itemized Deductions is a $1,000 loss in your kid ‘s 529 plan, you get no benefit. In this example, you wouldn’t get a deduction until the loss exceeded $2,000. A loss of, say, $2,200, would give you a $200 tax deduction.
Hope this helps!
If you need more help, ask a mod for my e-mail and let me know you sent an e-mail. Provide your cell phone number, I'll give you a call.
Willie
