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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.
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Here
are Tax Incentives
to Help You Save for College:
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1.
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tax-free until the funds are withdrawn to pay for qualified education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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