The Internal Revenue Service provides various tax incentives for college financial planning. One of the most popular IRS
tax incentives for college financial planning is the Coverdell Education Saving Account or ESA for short. An ESA is an account created to help parents save for future educational expenses. As in everything created by the IRS, there are extensive rules governing the proper use of Coverdell Education Saving Accounts.
Let’s take a closer look at several Education Savings Account rules.
A 529 plan, which is also known as a qualified tuition plan, is an effective investment tool you can use to save money for your children’s college expenses. While the Internal Revenue Service does not permit account owners to take a 529 plan tax deduction on their federal income taxes, it may be possible to claim a state tax deduction for contributions you make to the plan. However, the rules for taking this deduction vary by state.
A 529 plan is an investment account that parents can use to prepare for their children’s college expenses. 529 plans offer certain tax advantages, and some plans allow you to lock in tuition rates years in advance. Investing your money in such a way may seem like an excellent college planning idea, but it’s essential that you put your funds in a trustworthy account. If you are looking for such an account, you may wonder who offers 529 plans legally.
Pell grants are government grants awarded to help pay for the tuition and other education-related needs of college students who are financially disadvantaged. According to the U.S. Department of Education, maximum award amounts reach as high as $5,550 for the 2011-2012 school year, although the amount awarded per student varies on financial need.
Not all financially disadvantaged applicants qualify for a government pell grant, however, as they are typically awarded to students who are undergraduates who have not previously completed a four-year bachelor’s degree program. Furthermore, pell grant funding is only available for up to 18 semesters of college for students who first qualified for a pell grant after the summer of 2008
Every parent looks forward to that time when their children get accepted to their chosen college or university. It’s a time of great excitement and pride of accomplishment for both parents and children.
It is also a time of nervousness and uncertainty for both parties regarding the new environment, friends, work load, and most importantly, finances.