More Ways To Use The Taxation System To Pay College Education
By Terry Lowery, Thu Dec 8th

In addition to Education IRAs and federal tax credits there aremany other ways to use the taxation system to pay for the highand increasing costs of a college education. You need toconsider all of these tax benefits in order to ensure that youcan benefit from this form of government support to families whoare helping their kids get a higher education.

Some of the other ways to let the taxation system pay for someof your family’s college education expenses include deductibleexpenses, Section 529 plans, regular IRA’s, savings bonds,investing on your child’s behalf, and putting your child to workfor you.

You can deduct up to $4,000 a year in qualified educationalexpenses but you can’t combine a deduction and a tax credit forthe same student in the same year. You can however split thededuction and the credit if you have more than one child whoqualifies.

Many people also contribute money to Section 529 plans which arenamed after the section of the IRS code that regulates theseplans You can also put money into so-called Section 529 plans.Section 529 plans are regulated by the states that hire an assetmanagement company to look after the business side. You cancontribute to these plans for future college education and theearnings added to the funds are tax-free.

You can now also use your regular IRA penalty-free

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if you wantto use some of it pay for qualified educational expenses. Youcan deduct up to $2,500 in interest paid for educational loansas an above-the-line deduction. Like many other deductions thesebenefits are not available to single, or dual high-incomeearners.

But perhaps the easiest way to get taxation monies working foryour child’s college education is through a special U.S. SavingsBond exclusion. You can exclude a portion of the interest thataccrues on such bonds if you meet certain qualifiers. Thosequalifiers include having paid education expenses in the year ofredemption; are not married and filing separately, and if youmeet the general base income restrictions.

Still another way to beat the taxman and save money on collegeeducation is to make investments in your child’s name. Childrenunder 14 face a much lower tax rate and even as their incomegrows it will likely be at a lower rate than yours. Just makesure that the investment is in your child’s name and stay ontheir good side because ultimately that money is theirs.

The final way to meet your college education needs that worksfor some people is to hire your kids if you are self-employed.There are some restrictions but once again any monies you giveyour children should be plowed back into their own or the familycollege education fund.

About the author:This article provided courtesy of http://www.degrees-online.net