10 Things: New Education Tax Breaks For A Child Or Grandchild

August 4, 2018

 

1. If you have a child or grandchild, for the first time, you 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. Thanks to the Tax Cuts And Jobs Act (TCJA), you now can draw up to $10,000 tax-free per student from a 529 plan, which is a tax-advantaged program sponsored by states, state agencies, and educational institutions.

 

3. While your contributions to a 529 plan are not deductible, earnings grow free of federal income tax on withdrawals to pay for qualified school expenses.

 

4. You are not limited to 529 plans sponsored by your State. You can choose from a long list of 529s sponsored by other States, and pick the right one for you. Call us if you want help with this.

 

5. Significant relief is that the new law leaves the student loan interest deduction unchanged at $2,500. Some lawmakers wanted to scrap it, but the majority rallied to the tax break's defense. Americans owe some $1.48 trillion in student debt, and it's a thing to watch.

 

6. Student loans canceled due to death or disability, they now become tax-exempt. Till now, the debt would be added to the income of a deceased or disabled individual. This new tax benefit is not retroactive, and only affects loans taken from 2018 through 2025. Congress may choose to extend this tax break.

 

7. The TCJA axes taxes on alimony payments, so custodial parents should have it easier qualifying for need-based aid. Their income won't be as high as what's reflected in tax records, which is what federal aid officials rely on to determine whom to help and by how much.

 

8. Tax deductions for interest on home equity loans and lines of credit were eliminated. These are significant sources of education funding, businesses, and a range of other expenses. It's gone.

 

9. The new federal levy on colleges with big endowments could result in still-higher tuition costs.

 

10. Education tax breaks were boosted overall by the TCJA, but you almost must be a financial professional to manage the complexities of funding the education of a child tax-efficiently and with low investment expenses.

This article was written by a veteran financial journalist. While these are sources we believe to be reliable, the information is not intended to be used as financial or tax advice without consulting a professional about your personal situation.

This article was written by a professional financial journalist for Private Group Wealth Management, LLC and is not intended as legal or investment advice.

 

 

 

Share on Facebook
Share on Twitter
Please reload

RECENT POSTS
Please reload

Investment advisory services offered through (RIA Name), a registered investment adviser. This site is published for residents of the United States only. Representatives may only conduct business with residents of the states and jurisdictions in which they are properly registered. Therefore, a response to a request for information may be delayed until appropriate registration is obtained or exemption from registration is determined. Not all of the services referenced on this site are available in every state and through every advisor listed. For additional information, please contact PGWM, LLC at rar@pgwm.net.

© 2019 Private Group Wealth Management, LLC  

221 A Louisiana Ave, Corpus Christi, TX 78404

Tel: (361) 442-5105      Fax: (361) 888-5105       email: rar@pgwm.net

DISCLOSURES   PRIVACY   FORM ADV    CONTACT    HOME

Website Maintenance    ID•GRAPHICA   idgraphica.custom@gmail.com