COLLEGE EDUCATION
DEDUCTIONS
Four
years of college eduction will exceed $200,000 at a private University,
and more than $100,000 for State school. Combine this with the
reality that many students take more than 4 years to finish, and the
cost will be a huge burden affecting your lifestyle and potential for
retirement. The Federal Government has a few college tax
incentive passed in recent years.
Here
are Tax Incentives
to Help You Save for College:
Coverdell
Education Savings Accounts (Education IRAs).
In 2002, the $500 annual limit was increased to $2000. Several changes
have made the accounts more attractive. For example:
- The
annual
contribution is available for most people. The income cap is $190,000
for a married couple filing jointly.
- The
Coverdall
Plans can be used simultaneously with the Hope and Lifetime Tax
Credits.
- The
money can
be used for K-12 as well as post-secondary education.
2.
College tuition deduction.
"Qualified" higher education expenses of up to $2,000 or $4,000
(depending on your income) paid for you, your spouse, or a
dependent may be deductible. Taxpayers can claim it even if they do not
itemize deductions.
In addition to these tax breaks, you may also want to take advantage of
Section 529 plans. These plans are set up by states. Even though you do
not get a tax deduction for contributions to these plans, the
earnings grow tax-free until the funds are withdrawn to pay for
qualified education expenses.
Give Ronald J. Cappuccio,
J.D., LL.M. (Tax) a call at
(856)
665-2121> to talk about the best way to save for
college.
Continuing
Education Deductions.
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