Author Topic: Private School Tax Break 529 savings accounts  (Read 5555 times)

Offline letav_aved

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Private School Tax Break 529 savings accounts
« on: December 25, 2017, 07:24:46 PM »
http://money.cnn.com/2017/12/20/pf/private-school-529-tax-bill/index.html


Great news, huge potential tax savings for anyone who sends there children to private school K-12!

How much will you save?


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Offline 12HRS

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Re: Private School Tax Break 529 savings accounts
« Reply #1 on: December 25, 2017, 09:07:50 PM »
Tuition committees will just require more money from the parents

Offline msg

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Re: Private School Tax Break 529 savings accounts
« Reply #2 on: December 25, 2017, 09:17:59 PM »
http://money.cnn.com/2017/12/20/pf/private-school-529-tax-bill/index.html


Great news, huge potential tax savings for anyone who sends there children to private school K-12!

How much will you save?


.....One more reason to be appreciative to Trump!

Its only a pretax savings for some state tax. It is not pretax for federal tax

Offline michael

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Re: Private School Tax Break 529 savings accounts
« Reply #3 on: December 25, 2017, 09:31:38 PM »
If you put money into a 529 account, it can grow tax-free even from federal income tax.

New York has a deduction of up to $10k for contributions. NJ does not. Does anyone know if this would help for someone working in NY and living in NJ?

Offline ShlockDoc

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Re: Private School Tax Break 529 savings accounts
« Reply #4 on: December 26, 2017, 04:30:09 AM »
If you put money into a 529 account, it can grow tax-free even from federal income tax.

New York has a deduction of up to $10k for contributions. NJ does not. Does anyone know if this would help for someone working in NY and living in NJ?

Yes. You can put money into the NYS 529 plan as a deduction against your NYS income.

Offline ExGingi

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Re: Private School Tax Break 529 savings accounts
« Reply #5 on: December 26, 2017, 05:42:50 AM »
Yes. You can put money into the NYS 529 plan as a deduction against your NYS income.
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Offline hachover

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Re: Private School Tax Break 529 savings accounts
« Reply #6 on: December 26, 2017, 06:48:43 AM »
-1
https://www.nysaves.org/home/faqs-getting-started.html#move-state

The link supports what he said. You need a diff source if you want to disagree
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Offline michael

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Re: Private School Tax Break 529 savings accounts
« Reply #7 on: December 26, 2017, 07:34:56 AM »
Yes. You can put money into the NYS 529 plan as a deduction against your NYS income.

Won’t this just reduce the amount of NY tax that I pay and that offsets my NJ tax liability, and therefore leave me with zero tax benefit in the end?

Offline good sam

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Re: Private School Tax Break 529 savings accounts
« Reply #8 on: December 26, 2017, 07:50:15 AM »
Its only a pretax savings for some state tax. It is not pretax for federal tax
What effect does it have on your federal tax?
If you don't care why would you comment?
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Offline Toasted

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Offline good sam

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Re: Private School Tax Break 529 savings accounts
« Reply #10 on: December 26, 2017, 10:21:22 AM »
0
https://www.nysaves.org/home/why-ny-529-direct-plan/tax-benefits.html
I don't understand. What was the CNN article in the OP talking about? Not federal tax?
If you don't care why would you comment?
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Offline CPA

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Re: Private School Tax Break 529 savings accounts
« Reply #11 on: December 26, 2017, 10:22:02 AM »
Before you contribute with the intention of using the funds for K-12 I would contact your state plan. My understanding is that each state plan would have to adopt the K-12 rule on the state level - not saying they will or won't but until they do so your money may be stuck till your kids are in collage.

Offline skyguy918

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Re: Private School Tax Break 529 savings accounts
« Reply #12 on: December 26, 2017, 10:32:45 AM »
Before you contribute with the intention of using the funds for K-12 I would contact your state plan. My understanding is that each state plan would have to adopt the K-12 rule on the state level - not saying they will or won't but until they do so your money may be stuck till your kids are in collage.
It's not stuck until college. You can withdraw the principal at any time. The only downside to doing so would be losing your states pre-tax benefits, which in this scenario you're not getting anyway.

I don't understand. What was the CNN article in the OP talking about? Not federal tax?
You pay no federal tax on the gains in a 529, assuming it's a qualified withdrawal - the definition of which (at least at the federal level) has now expanded to include K-12. The benefits on the state level have always included no state tax on the gains either, as well as deductions/credits in certain states. The question is whether those state benefit will apply to K-12 as well.

Offline CPA

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Re: Private School Tax Break 529 savings accounts
« Reply #13 on: December 26, 2017, 10:44:02 AM »
Some state plans will only allow you to pull out the gains as a proportion of the total balance. For example you pit in 10k, it grows to 11k, bit when you pull out 10k they will assign 909 of the withdrawal as gain and the other 9,091 as principal. They would also recapture any tax benefit you had on the contribution as well as penalties.

Offline ChaimMoskowitz

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Re: Private School Tax Break 529 savings accounts
« Reply #14 on: December 26, 2017, 10:45:29 AM »
Can any of these be funded with a CC like we did a few years ago?
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Offline skyguy918

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Re: Private School Tax Break 529 savings accounts
« Reply #15 on: December 26, 2017, 10:55:12 AM »
Some state plans will only allow you to pull out the gains as a proportion of the total balance. For example you pit in 10k, it grows to 11k, bit when you pull out 10k they will assign 909 of the withdrawal as gain and the other 9,091 as principal. They would also recapture any tax benefit you had on the contribution as well as penalties.
My point is that if for example, you're in NY and you put in $10k to get the full 2017 deduction, hoping that you'll be able to use it for K-12, you're not stuck till college if they don't allow the state benefits for K-12. This will almost certainly be figured out before you file your 2017 taxes. If they don't allow K-12, just pull all the money out. At most it'll cost you some small portion of whatever minimal gains you had in the account over those few months. Certainly worth the risk for the potential reward of the state tax benefit on $10k.

Offline shapsam

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Re: Private School Tax Break 529 savings accounts
« Reply #16 on: December 26, 2017, 11:04:30 AM »
My point is that if for example, you're in NY and you put in $10k to get the full 2017 deduction, hoping that you'll be able to use it for K-12, you're not stuck till college if they don't allow the state benefits for K-12. This will almost certainly be figured out before you file your 2017 taxes. If they don't allow K-12, just pull all the money out. At most it'll cost you some small portion of whatever minimal gains you had in the account over those few months. Certainly worth the risk for the potential reward of the state tax benefit on $10k.
But the $10k wouldn't get deducted from your income - only the the growth is tax free, no?

Offline skyguy918

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Re: Private School Tax Break 529 savings accounts
« Reply #17 on: December 26, 2017, 11:14:55 AM »
But the $10k wouldn't get deducted from your income - only the the growth is tax free, no?
That depends on what NYS decides to do. My point is that the fact that NYS (or any other state) might decide to limit their benefits for K-12 withdrawals probably should not stop one from putting in the $10k for this year. Best case, you get the $10k state deduction and use it to pay tuition (plus any tax-free gains you might have in that short period), and worst case, you take it out to pay tuition and end up in the same situation as if you hadn't put the money in at all. I am not a CPA, but that's what it seems like to me.

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Offline skyguy918

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Re: Private School Tax Break 529 savings accounts
« Reply #19 on: January 08, 2018, 10:08:34 AM »
Before you contribute with the intention of using the funds for K-12 I would contact your state plan. My understanding is that each state plan would have to adopt the K-12 rule on the state level - not saying they will or won't but until they do so your money may be stuck till your kids are in collage.
Quote from: https://www.npr.org/sections/ed/2018/01/08/575167214/congress-changed-529-college-savings-plans-and-now-states-are-nervous
"I think it would immediately create an unintended hit to the state's budget," agrees Greg Berck of the New York State Council of School Superintendents. "States plan ahead, sometimes multiple years ahead, and New York State will be required to provide a state tax deduction [to parents of students in K-12 private schools] unless the legislature acts to amend our state law."
« Last Edit: January 08, 2018, 10:18:48 AM by skyguy918 »