529 College Savings Plan Tax Deduction for 2009, 2010

Saving for College

The earlier savings plans for parents who were saving for their child’s education were not very attractive. There weren’t any real tax benefits and the account had to be in the child’s name which gave the child full control of the money once he or she was 18. Not sounding very good huh?

Parental Control

Well, things have changed and for the better. In 1996 the passage of the Small Business Job Protection Act made the savings plan for parents a whole lot better. Section 529 college accounts were created.

Now parents had tax benefits for saving that money for their child’s education. Even better news, parents maintained permanent control over the account and money.

Guidelines

Here’s how it works. First of all, anyone can contribute to the savings. It doesn’t matter if you’re rich or poor just keep in mind the US gift tax limitation. The estate taxation will be something to consider.

New Beneficiary No Problem

Okay, when the parent first opens the account a designated beneficiary has to be named and it is usually the child (student). This is after all for the child who will attend college. If the named beneficiary does not go to college, the parents can change the beneficiary. The new plan is very flexible and understands real life situations. The new beneficiary can be any immediate family member or descendants of the original beneficiary.

When it is time to distribute the money for the education of the qualified child (student) there will not be taxation on the growth of the original investment. How’s that for some good news?

The educational expenses cover a lot of different expenses like uniforms, books, and even transportation. Keep in mind each state runs its own Section 529 account system.

If you would like more information on 529 College Savings Plan Tax Deduction for 2009, 2010 then, visit TurboTax Online today! The tax experts are always available to answer your questions and to help you with your tax return. Not many of us have the time to read how all the laws have changed concerning education tax credits and savings plans. Let them take care of that and make your life a little easier.

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