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Financial Briefs

 

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Five Key Factors In Funding A Child's Education

The Tax Cuts And Jobs Act changed funding a child’s education significantly.  Here are five factors to consider.

1.    Individuals can now pay tuition for kindergarten through 12th grade at private, public or religious schools with money saved in tax-advantaged 529 college savings accounts.

2.    Individuals can now withdraw up to $10,000.00 federally tax-free per student from a 529 plan.  While contributions are not deductible, earnings grow free of federal income tax on withdrawals used for qualified school expenses.

3.    Individuals are not limited to 529 plans sponsored by their state and can choose from a long list of 529s sponsored by other states.

4.    The Tax Cuts And Job Act axed taxes on alimony payments, so custodial parents should have it easier qualifying for need-based aid.

5.    Tax deductions for interest on home equity loans and lines of credit were eliminated.  These are major sources of education funding and losing their deductibility may require a change in one’s college funding plan.

Education tax breaks were boosted overall by the Tax Cuts And Jobs Act, but one almost needs to be a financial professional to navigate the complexities confidently. 

 

Please note that the reader should discuss all strategies stated above with their accountant and/or legal advisor before implementing any of the above listed strategies.

Legend Financial Advisors, Inc.®(Legend) is not a tax or legal advisor.  It is Legend’s intention to merely present ideas and strategies to readers to discuss with their own tax and legal advisors or in conjunction with Legend’s advisors.




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