North Vancouver, BC -- (ReleaseWire) -- 06/21/2018 --As a Vancouver-based accountant who specializes in cross-border taxation, Mark Schiffer is aware that many parents face unique challenges when it comes to saving for their children's education. For parents wondering about the best, most tax-effective way to save money, tax reform legislation in 2017 means that it's possible to take advantage of 529 Plans to save for K-12 education as well as college or vocational school.
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It's possible to open a 529 Plan in any state, and there are no income restrictions for the individual opening the account. Contributions, however, must be in cash and the total amount must not be more than is reasonably needed for higher education (as determined initially by the state). There may also be a minimum investment required to open the account, typically, $25 or $50.
Each 529 Plan has a Designated Beneficiary (the future student) and an Account Owner. The account owner may be a parent or another person and typically is the principal contributor to the program. The account owner is also entitled to choose (as well as change) the designated beneficiary.
Neither the account owner or beneficiary may direct investments, but the state may allow the owner to select a type of investment fund (e.g., fixed income securities), change the investment annually, as well as when the beneficiary is changed. The account owner decides who gets the funds (can pick and change the beneficiary) and is legally allowed to withdraw funds at any time, subject to tax and penalties.
Of note, unlike some of the other tax-favored higher education programs such as the American Opportunity and Lifetime Learning Tax Credits, federal tax law doesn't limit the benefit only to tuition. Room, board, lab fees, books, and supplies can all be purchased with funds from the 529 Savings Account.
Distributions from 529 plans are tax-free as long as they are used to pay qualified higher education expenses for a designated beneficiary. Distributions are tax-free, even if the student is claiming the American Opportunity Credit, Lifetime Learning Credit, or tax-free treatment for a Section 530 Coverdell distribution—provided the programs aren't covering the same specific expenses.
To learn more about opening a 529, talk to a team member at US Tax Professionals. They'll look at state and federal laws to help assess if the 529 is your most tax-effective option for educations savings. To book an appointment, please call 604-281-3318.
About US Tax Professionals
US Tax Professionals provide tax services for dual American and Canadian citizens in Vancouver. Founded in 2013, they specialize in taxation for US citizens and expats, taxation and accounting for business, cross border taxation for US and Canadian citizens, as well as accounting and taxation of alternative investments, including private equity funds and hedge funds.
For more information, visit https://www.us-taxprofessionals.com/ or call 604-281-3318.
US Tax Professionals
Mark Schiffer
604-281-3318
Company Website: https://www.us-taxprofessionals.com/
US Tax Professionals Share Tips on Education Savings
529 Plans present an excellent way to save for education, says US Tax Professionals