Class 20 - Investment choices Brokers fees High fees Annual...

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Tax Credits - Education o Hope Scholarship credit - $1,800/student o Lifetime learning Credit - $2,000 per family o American opportunity credit - $2,500/student - Family o Child tax credit - $1,000 for each child under 17 o Adoption tax credit o Dependent Care Credit - % of $3,000 - College Savings Plans o Tax Advantage accounts Coverdell Education Savings Account Transferred to student at age 18 Tax free growth and distribution Income phase outs Contribution of $2,00 a year All education expenses Private and secondary school in addition to college Section 529 college Saving Plan Offers: Tax free growth in contributor’s name Federal tax-free distributions for education (until 2010) National choices of colleges No Phase out for higher income brackets Higher contributions allowed Watch for:
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Unformatted text preview: Investment choices Brokers fees High fees Annual fees Administration to state o Family income transfers What is the gift tax? Money Child Taxed at childs marginal tax rate Government transfers Uniform Gifts to Minors Act Transfer of money or assets to the child Advantage: taxed at childs rate Disadvantage: Kiddie Tax First $18,00 is taxed at childs rate Child is given right of possession at age 18 Trusts Minor Trust Designed to use the $13,000 gift tax exclusion for money transfers Child given right or possession at age 21 Current Income Trust Income must be distributed annually No age requirement for distribution Savingsforcollege.com...
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Class 20 - Investment choices Brokers fees High fees Annual...

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