TAX REFORM ADDS EDUCATION BENEFIT

1
(No Transcript)
2
TAX REFORM ADDS EDUCATION BENEFIT
3
Article Highlights

• Tax Benefits 
• Types of Tax-advantaged Education Savings Plans 
• Differences in Permitted Contributions 
• Differences in Qualified Education
• New 10,000 Allowance 
• Note This one of a series of articles explaining
  how the various tax changes in the GOPs Tax Cuts
  Jobs Act (referred to as the Act in this
  article), which passed in late December of 2017,
  could affect you and your family, both in 2018
  and in future years. This series offers
  strategies that you can employ to reduce your tax
  liability under the new law.
• Tax law provides two tax-advantaged savings plans
  for the Qualified State Tuition Plan (commonly
  referred to as a 529 Plan). They are similar in
  that contributions to the plans are not tax
  deductible (although some states do allow a
  deduction for contributions to their plans) and
  the earnings are tax deferred and tax free if
  used for qualified education expenses.

4

• They are different in that only 2,000 per year
  can be deposited into a Coverdell account,
  whereas contributions to a 529 plan are only
  limited by gift tax considerations and the cost
  of attending the states highest-cost university.
  This generally means the annual contribution to a
  529 plan is limited to the annual gift tax
  exclusion amount (15,000 for 2018) in order to
  avoid gift tax complications. However, the annual
  gift limit is per contributor and multiple
  individuals, typically grandparents, can also
  contribute to a 529 plan. On the other hand, a
  maximum of only 2,000 can be contributed to a
  Coverdell account regardless of the number of
  contributors. Thus, 529 plans typically accept
  the largest amount of college savings funds.
• Another difference has been that Coverdell
  accounts can be used for education in
  kindergarten and above, while 529 plans can only
  be used for post-secondary education. As a
  practical matter, the 2,000 annual Coverdell
  contribution limits dont provide for a
  substantial amount of savings that can be used
  for early childhood education.

5

• To alleviate that disparity, the Act amended the
  529 plan rules to allow, beginning in 2018, up to
  10,000 of 529 plan funds to be used federally
  tax-free annually, per student, for elementary
  school and high school education expenses. In
  addition the funds can be used to cover the
  expenses of attending public, private and
  religious schools. However, some states have not
  yet adopted the Acts law change or may need to
  change the language in their tax codes that
  define the accounts as college savings plans
  before distributions for elementary and secondary
  school expenses will qualify as totally state tax
  free. States that have allowed a deduction for
  contributions to their plans may decide to scale
  back some of the tax benefit if distributions are
  used for expenses in grade K-12.
• Both a Coverdell and a 529 plan can be
  established for the same student, and the
  combination allows more funds to be accumulated.
• For additional details or assistance in planning
  for a childs higher education, please give this
  office a call.

6
Contact Us - 

• Address - 147-08 235 Street Rosedale, NY 11422
• Phone -  [phone]
• Email - info_at_taxreliefrus.com
• Website - https//www.taxreliefrus.com
• Blog - https//www.taxreliefrus.com/blog/tax-refor
  m-adds-education-benefit/43184