When most people think about saving for college, they immediately think of saving in a 529 college savings plan. A 529 plan is account run by the state for purposes of saving for college expenses. You may have also heard about Educational Savings Accounts (or ESAs) and wondered if they have any advantages over a 529. Or what about using a Roth IRA for college savings? Let’s take a look at the pros and cons of these three different types of accounts.
A reader recently asked me about tax benefits for college tuition. She’s a mom thinking about going back to school for a new career and also thinking about how she will afford her children’s future education. Educational tax benefits are confusing because there are a number of options, and if you try to read all the details on the IRS website, you’ll probably end up either confused or asleep. To make it a little simpler for you, I’ll break it down to just the basics.
There are really only three options for getting a tax break on tuition that you’ve paid in the current tax year. There are some other tax benefits for saving for college, but that’s a post for another day. For tuition paid, there are two credits and one deduction available. If you don’t understand the difference between a credit and a deduction, start by reading my post on the most important tax lesson you need. [Read more…]
My kids are heading back to school in exactly one week. I’m going through the end-of-summer panic, where I realize I didn’t accomplish all the things I meant to during the summer. One of the big plans was helping my daughter memorize her multiplication facts. At the end of last year, her teacher stressed that it was important that she learn them before next school year. In June, I thought, “That will be easy. We have all summer!” Go ahead. You can laugh. [Read more…]