![]() ![]() What can you use this money for? Which expenses trigger taxes and penalties? If you do things right, no penalties or federal income tax-and, in many states, no state income tax-will be due on your withdrawals. However, a 529 account can be "superfunded" with contributions of $80,000 per person or $160,000 per couple-which uses up your federal gift-tax exclusion for five years. Contributing more than $16,000 per person would need to be reported to the IRS as a gift. Grandparents can also contribute up to $15,000 per person per year. You'll be in control of how much is withdrawn and how it'll be used, but there are a few things you need to know up front to make the most of your savings.įirst a reminder-you can save up to $16,000 per parent in a 529 account, or $32,000 per couple. Now college is closer and it's time to think about spending the money you've put aside. Year after year, you and your child have been saving for college through a 529 savings account. ![]() You can spend up to $10,000 from a 529 plan on tuition expenses for elementary, middle, or high school. 529 savings plans aren't just for college.You'll also want to plan ahead for any tax credits you may qualify for, which could help you decide how much you need to take from your 529 account.Decide ahead of time how you'll withdraw the funds and use them.You'll have to report your 529 plan spending to the IRS, so keeping careful records is important. Withdrawals from 529 plans are not taxed at the federal level-as long as you understand and follow all the rules for qualifying expenses.
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