Welcome to tax saving Guide
How To Reduce Your Taxes Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
You may also listen to this article by using the following controls.
Tax Free Savings for Children –The Way to Save for College
from:If you’re a parent who is worried about paying for college, it’s time for you to learn about the 529 college account. These accounts allow you to accumulate tax free savings for children in order to pay for college tuition and other college expenses. The money you contribute is money you’ve already been taxed on, but all the interest that accumulates is tax free. And, when the money is withdrawn it is not taxed as long as it is spent for allowable college expenses.
Accumulating tax free savings for children throughout their childhood is the simplest and most effective way to ensure that you’ll have enough savings accumulated for college. Financial planning experts recommend that you begin saving those tax free savings for children as early as you can. If you wait until they’re teenagers you won’t have enough time to accumulate enough savings.
In recent years, the costs of a college education have skyrocketed, which is why the government began the 529 program for tax free savings for children. In addition to the college 529 program, you can also take advantage of the Coverdell Education Savings plan, if you prefer.
There are two types of 529 college plans, and they have been around for years. The reason they’ve become so popular recently, however is because they just became tax exempt in 2002. The first type of 529 plan is called a prepaid college tuition plan and the second is called a college savings plan. Both allow you to accumulate tax free savings for children’s college, but the savings plan variety is more flexible. Not only will the savings plan variety allow you to use the money you set aside for more types of expenses, such as room and board in addition to tuition, but the college savings plan offers more types of investments for your money.
Both types of 529 plans have maximum yearly contribution amounts. In most cases the maximum contribution each year is $200,000. But, be careful to remember that if you contribute more than $11,000 in a single year you may be subject to gift taxes. 529 plans are also transferable between children, so if one child decides not to go to college, the money can be used by another child.
Coverdell Education savings plans work essentially like 529 plans, but they are less flexible. They still allow you to accumulate tax free savings for children, but their maximum yearly contribution amount is just $2000, so they don’t allow you to get ahead quickly if you start saving a bit late.
Before you choose a specific 529 or Coverdell plan, be certain to investigate the specific plan thoroughly, since each can be a bit different. Ask about maximum contribution amounts both yearly and lifetime and be sure to ask about fees, as well.
How To Reduce Your Taxes News
How Politicians Are Making You Stupid: Part 2
In his new TV ads, here are some of the things Mitt Romney is promising to do on his first day in office, if elected president: Reduce the deficit. Cut government spending. And cut taxes. [ Photo Gallery: ...
Read more...How Does Marital Status Affect Your Federal Taxes
Laws have always regulated who may marry, the obligations related to marriage and children and whether and how a marriage can be ended. Governments have always put their own social agenda above the pluralism of personal choice. Never in history have governments considered marital relations strictly private. In the U.S. tax code, hundreds of assumptions ...
Read more...How politics is making Americans stupid: Part II
In his new TV ads, here are some of the things Mitt Romney is promising to do on his first day in office, if elected president: Reduce the deficit. Cut government spending. And cut taxes.
Read more...How Big a Government Should We Have?
Few issues illuminate the presidential candidates’ wildly divergent views on the appropriate size and role of the federal government more than taxes and spending.
Read more...PSA: CPA Reminds Calgarians How to Park Their RVs
CALGARY, ALBERTA-- - Each spring and summer, the Calgary Parking Authority receives a number of complaints on how recreational vehicles are being parked in residential neighbourhoods across Calgary. To ...
Read more...