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One Way to Save for  College

One Way to Save for College


If you start early, college payments may not be painful.


by Paula Vuksic, CPA

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It’s easy for new parents to rationalize that they have 18 years to put aside money for their baby’s college education, but it’s also never too early to start thinking long term. Save early and let the money work for you.

A Section 529 plan allows your investment to grow tax free and if it is ultimately used to pay education expenses, it will never be taxed. Most plans can be started with as little as $1,000, although some people like to front-load the plans with their annual gifting. It’s important to keep in mind that your child can always get a scholarship or loan. If choosing between a retirement plan and the 529 plan, put money away for yourself. If you can max out on your retirement plan, the 529 is an excellent vehicle.

When your bouncy bambino (or bambina) does finally go away to college (he/she’s obviously Ivy League material!), you will be able to claim the Hope and Lifetime learning credits for those expenses not covered by the 529 plan. Maximum Hope credit is $1,650. Maximum Lifetime learning credit is $2,000.

After all those years of footing the bill for your children, you can let them earn their keep and reap some tax benefits at the same time. Having your son or daughter work for you becomes a deduction for your business, as long as it is reasonable, and let’s face it, you are going to have to give them money anyway and at least you’ll know where they are.

The bottom line is that while you enjoy your new addition to your family, also enjoy the tax break that Uncle Sam provides.



Paula Vuksic is a CPA and tax professional with Citrin Cooperman & Company, LLP, one of the leading accounting and tax firms in the New York metropolitan area. She’s also a new mom who has taken advantage of every tax break the IRS has to offer. She can be reached at pvuksic@citrincooperman.com.


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