Tax Benefits To College Education Savings Plans
Let’s face it, the cost of higher education is great. Going to school is one way to get ahead, because most employers who offer better paying jobs are looking for applicants with a college degree. But, getting there can put a real strain on your finances. There are options for paying for college, such as student loans and grants. However, if you are trying to avoid going into debt, taking out a loan may not be up your alley. One thing you can do is to open a college savings account, and this can be for yourself or for the benefit of another.
The most common form of college savings plan is called a 529 Plan. The plan is called a 529 Plan because it is named after the IRS provision by the same number. Along with providing an account for you to put money into for growth, a 529 Plan also has other financial benefits:
- Money you deposit in a 529 Plan is tax free, on your state income tax return. This means that your taxable income is reduced by a portion of the total amount you pay into the plan over the year.
- The money deposited is invested, which means that when it comes time to put the money to use, there is more in your account that what you have put in over time. This is one way to save for college that doesn’t feel so overwhelming. Opening an account well before reaching college age will allow the account to grow.
There are limits on the amount you can contribute to these plans, so be sure to follow the rules to receive the maximum benefits. The money can be used for higher education, and in some instances can even be used for the technology needed to attend college (like a computer). Establishing a 529 college savings plan does not have to be a daunting task, once set up you are I control of the account, for the benefit of the named beneficiary. If you have questions about how to save for college, call us to speak with one of our trained financial and budget specialists.
If you have questions about college savings and the tax benefits it offers, call a knowledgeable attorney to discuss your options. We can help you understand your choices and make a decision that works for you. Call a Plantation, Florida debt relief attorney today for more information.