Welcome to Tax Saving Guide
Tax Free Savings Accounts Article
. For a permanent link to this article, or to bookmark it for further reading, click here.
You may also listen to this article by using the following controls.
How a Tax Free Savings Account Can Help Fund College
from:If you have children, they need college funds. Each year the cost of college tuition and other college expenses increases, making it more and more difficult for you to fund your children’s education. The key to being able to put your children through college is starting a college fund early in your child’s life, so that the money has time to grow. A tax fee savings account for college is the best way to go.
There are several type of tax free savings accounts you can use for college. The most popular are 529 accounts. Money that you deposit into a 529 account is money you’ve already been taxed on. However, you won’t pay taxes each year on the interest the money earns. In addition, with a 529 plan, you won’t pay taxes on the money when it’s withdrawn, provided you use your withdrawals only to pay for qualified college expenses, such as tuition, books, room and board.
There are other types of tax free savings accounts for college, including the Coverdell Education Fund. This account works much like a 529 tax free savings account for college, but there are some important differences.
First of all, with a 529 tax free savings account for college, your maximum contribution in a single year is as much as $200,000. With a Coverdell account, the maximum contribution amount each year is just $2000, which is not much if you’re getting a late start on college funding. However, with a 529 plan, you must have a money manager, and with a Coverdell fund, you’re in control of the investments. Assets in a Coverdell fund belong to the student, which can reduce the amount of financial aid a student can receive. However, money in a 529 plan belongs to the account owner. If you set the account up in the name of the parents, the amount in the account does not affect financial aid.
Finally – and this is a big one – money set aside in a Coverdell account belongs to the student and is controlled by them once they turn 21. They can spend the money to go to school, or to buy a Harley and ride it across country. With a 529 plan, the contributor (meaning you, the parent) has control over the money. In addition, with a 520 tax free savings account, if Junior decides to forego the college education for that ride cross country on a Harley, you can redirect his college funds to his education minded little sister.
Only you can decide which type of college fund is best for your child. The most important thing is that you do something – before it’s too late.
Related Articles for Tax Free Savings Accounts
Tax Free Savings Accounts Specific Links
Connect at Current.com
- Stay current! All the Latest News and Videos: Entertainment, Politics, Sex, Tech, and Music. See whats new at Current.com.
-- http://www.current.com/
Watch Free Videos At Mevio!
- Tons of Free Videos, Only At Mevio.com
-- http://www.mevio.com/
Howie Mandel & The Talking Pine
- Howie Mandel tries to come up with a holiday campaign for Buy.com. Buy.com has millions of items at amazing prices, free shipping, video reviews, over 20 major categories of products.
-- http://www.youtube.com/
Free Tech and Gadget Reviews!
- Watch GeekBrief With Cali Lewis on Mevio!
-- http://www.geekbrief.mevio.com/
Free tech talk and news video!
- Watch Tech5 with John C. Dvorak now!
-- http://www.tech5top5.mevio.com/
Tax Free Savings Accounts News
Province moves to protect tax-free savings accounts (The Journal Pioneer)
Attorney General Gerard Greenan recently introduced legislation that will clarify how the proceeds from the new Tax-Free Savings Accounts (TFSAs) may pass to beneficiaries after the account holder's death.
Read more...National Bank to offer GIC transferable to a TFSA (Investment Executive)
With a month to go before Canadians can begin putting their savings into tax-free accounts, National Bank Financial Group is launching a GIC that will give savers a head start.
Read more...British Columbians most likely to open tax-free savings accounts in 2009 (Business in Vancouver)
A new Fidelity Investments survey has found that British Columbians are the most likely Canadians to open a tax-free...
Read more...Liberty Tax Advises that Theres Still Time to Cut Your 2008 Tax Bill If You Act Now (Business Wire via Yahoo! Finance)
VIRGINIA BEACH, Va.----The tax savings you reap in 2009 will depend on any additional tax cutting measures that you can take before the end of 2008, advises Liberty Tax Service. Take the time to review and organize your tax records and identify more deductions that you can take on your 2008 return.
Read more...10 Year-End Tax Planning Tips from Grant Thornton (SmartPros Accounting)
Dec. 1, 2008 (SmartPros) It's not too late for you and your clients to consider some late tax planning strategies, according to Grant Thornton.
Read more...