Students and Their Parents Seek Advice on Education Costs from Financial Planning Professional, Markwei Boye
Summary
Any family member with adjusted gross income below $190,000 in a joint return or $95,000 in a single return can contribute toward the $2,000 maximum annual addition to a Coverdell account, where the contribution will grow tax-deferred, until withdrawn for any of a liberal list of education costs -- even private elementary and secondary tuition.Funds withdrawn from Section 529 plans are totally free from federal income tax if they are used to pay qualified higher education expenses.Hope and Lifetime Learning credits are also available and several funding sources can be coordinated in order to pay as many costs as possible with tax-favored dollars.Any family member with adjusted gross income below $190,000 in a joint return or $95,000 in a single return can contribute toward the $2,000 maximum annual addition to a Coverdell account, where the contribution will grow tax-deferred, until withdrawn for any of a liberal list of education costs -- even private elementary and secondary tuition.That deduction is available whether the taxpayer itemizes deductions or not, but begins to phase out at adjusted gross income levels in excess of $47,000 ($94,000 on a joint return).Planning education funding for you, your children, or your grandchildren may involve coordinating five tax law provisions -- six, if you count the tax-free redemption of Series E bonds to pay higher education costs, and you might want some help.Markwei Boye has studied these provisions and he is well qualified to assist you.