There are a plethora of plans and a multitude of methods to save when it comes to education expenses. This article will focus on the two big savings opportunities: 529 Qualified Tuition Programs and Coverdell Education Savings Accounts.
529 Plans (so named for Internal Revenue Code Section 529) are the most common savings plans for education, but there are reasons to consider a Coverdell. First, here is a list of some similarities.
While there are many similarities in the plans, here are a few of the significant differences.
While there are limits on Coverdells that don't apply to a 529, the ability to choose your investments, to use plan funds for elementary and secondary school expenses, and the April 15 opening and contribution deadline can make them quite desirable. This is especially true since expenses typically deemed nondeductible, such as private school or computer/internet expenses, can be paid for from the plan. So if you have young children and are setting aside for education, consider making contributions to both a Coverdell and a 529 plan.
Now that summer is here, you would think you could just focus on having fun in the sun and forget about taxes! The truth is that there may be some things you are doing right now that could save you money on your taxes next spring. Check out this video from the IRS for a good example.
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