Educate Yourself About Section 529 Savings
Section 529 Savings plans for Kindergarten through high school education:
I want to discuss a little known change in the tax law that allows tax free distributions from educational savings plans (section 529 plans) that can be now be used to pay for the tuition for elementary and secondary private and parochial schools. There is an limit of $10,000 per student per year.
Note: This $10,000 yearly cap does NOT apply to distributions made for college or grad school tuition.
However, the state tax treatment of these distributions isn’t that clear. Roughly 30 states have said that they will follow the federal treatment of making these distributions tax free. Some states, such as California, Oregon, Michigan, New Jersey, and Vermont have announced that they will NOT follow the federal rule and make the distributions used for primary school taxable. Some states such as New York are still considering how to treat these distributions. Thus, you would need to contact a good accountant in your state to determine how your state will treat the distributions.
All content on this site is the property of Taxbot, LLC and/or Sandy Botkin. You may link to any article that you wish, or share via the social media buttons below. However, please do not copy articles or images for use on other sites without express written permission.