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 child’s marginal tax rate Government transfers Uniform Gifts to Minors Act Transfer of money or assets to the child Advantage: taxed at child’s rate Disadvantage: • Kiddie Tax First $18,00 is taxed at child’s 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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This note was uploaded on 12/01/2011 for the course HDFS 238 taught by Professor Boyce during the Fall '10 term at Michigan State University.

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

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