It’s easy to explain to parents of younger children why 529s make sense: Contribute now and your account grows tax-free for 18 years until college. If you live in one of the more than 30 states that offers a tax deduction, that’s an even bigger incentive. Here in Oregon, for example, we get a tax deduction for the first $4,865…
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Tax Credits and Deductions
(and what isn’t) A 1098-t is a tax form that serves several purposes. It reports qualified tuition and fee payments made to your college, as well as scholarships received to offset those costs. But qualified expenses is a big tent-type of phrase that means different things in different situations. All by way of saying, your 1098-t is not an exhaustive…
Planning for college cash flow can be tricky. It’s not just that the average public university costs over $25,000 per year whereas the average family has saved just over $18,000 total. There’s also the combination of tax credits and their attendant rules, a confusing menu of borrowing options, and misunderstandings about how aid formulas treat savings. Add multiple children with…
The Federal Reserve Board of Governor’s Report on the Economic Well-Being of US Households has a wealth of data on student loans, including a breakdown of borrowing by age range, forms of debt, and payment status by school type. Some interesting points:
One of the big changes to the tax bill was making our young adult children less valuable to their parents from a tax perspective. The dependent exemption is gone and the child tax credit for 18- to 23-year-old dependents is only $500. The change does open a door to higher-income families for the American Opportunity Tax Credit, though. The AOTC…