Parents

Helping Parents Make Sense of How to Save for Their Kids’ Futures

Major changes to our tax code means that families have new opportunities to invest in their children’s educations– but all those rules and regulations can get complicated.

Luckily, there are just a few important points that parents need to know in order to take full advantage of savings plans that allow them to save for their kids’ futures totally tax-free.

As the brilliant financial minds at The Motley Fool wrote earlier this month:

You don’t have to participate in your own state’s [529] plan, but if you do, you might be able to get some sort of a benefit. Thirty-five states offer a tax deduction on the state income tax return if you participate in your state’s plan, so that’s definitely the first place to look if you’re interested.

The great benefit of a 529 savings plan is that the money grows tax-free as long as you use it for qualified higher education expenses, meaning college, but thanks to the new tax law that was just passed, up to $10,000 can be taken out for qualified elementary or secondary school expenses tax-free. A lot of people are very excited about this.

One thing we should note, though, is that the new tax law just said you can do that in terms of federal free taxes. Not all the states are on board, yet with this, so before you take money out to pay for elementary or secondary school, check with your state to see what the tax status of that is going to be.

Click here to read the whole story via The Motley Fool.

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