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College Saving

 

 

Schultz & Associates, CPA, Plymouth, Michigan

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College Saving Tips For Parents

  1.  Open a 529 Plan as soon as your child is born.
  2.  Take advantage of education related tax credits such as the Hope Scholarship.
  3.  Ask grandparents to help.
  4.  It is never too late to start.
  5.  Consider prepaid tuition plans.
  6.  Consider savings bonds
  7.  Consider Coverdell Education savings account.
  8.  Help your child research scholarship opportunities.

 

College Saving Tips For Students

  1.  Always apply for financial aid – FAFSA.ed.gov.
  2.   Apply for contests that give scholarships.
  3.   Apply for scholarships.

What is a 529 College Saving Plan

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Schultz & Associates, CPA has a college saving plan calculator that is available for free use.

A 529 Plan is a college saving education plan.They are operated by a state or educational institution.  They are designed to provide families with a account to fund future college costs. The number 529 refers to the Internal Revenue Code that created this college saving plan. The college saving plan was established in 1996.

529 college saving plans are used to pay for the cost of qualified colleges throughout the United States. Most plans are not dependent on which state your plan is from. Nearly every state has a 529 college saving plan.  Each state decides what to offer in their 529 plan. So 529 college saving plans differ from state to state.  Plan benefits and features should be researched.

The 529 saving plan has tax benefits.  Income generated from these accounts are not subject to income tax.  If the money is withdrawn from the account to pay for qualified educational expenses then the amount withdrawn is not taxable.

Parent can set up these accounts as owners and make their child the beneficiary.  Because of this set up, children are not allowed to control the account once they turn 18. Amounts not used by one child can be transferred to another child that needs the funds for college.

 

 

 

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Tax advice contained in this communication, including attachments and enclosures, is not intended or written to be used, and may not be used for the purpose of (i) avoiding tax related penalties under the Internal Revenue Code or (ii) promoting, marketing or recommending to another party any tax-related matters addressed herein.

 

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