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529 vs tax credit vs ???
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ps56k
May 14, 2012, 7:03:55 PM5/14/12
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We have a 529 account setup for our son at UW/Madison.... a soph.
It is setup with the Illinois Brightstart program.
As yet, we have not drawn any funds from it.
SO - We have deposited $20k into it for a couple years,
to get the break on the IL state taxes.
How should we handle the upcoming tuition payment for next year ?
What logistics, paper trail or whatever should we do
to draw from the 529 (in his name) and then pay the tuition ?
If we draw the 529 into his checking acct, and pay - there is no real
benefit as there is no real income ?
If we draw the 529 into his checking acct, and pay us - and we pay the
tuition, can we use the tax credit ?
Any suggestions to maximize this common scenario ?
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Goes Unpunished
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<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
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It is setup with the Illinois Brightstart program.
As yet, we have not drawn any funds from it.
SO - We have deposited $20k into it for a couple years,
to get the break on the IL state taxes.
How should we handle the upcoming tuition payment for next year ?
What logistics, paper trail or whatever should we do
to draw from the 529 (in his name) and then pay the tuition ?
If we draw the 529 into his checking acct, and pay - there is no real
benefit as there is no real income ?
If we draw the 529 into his checking acct, and pay us - and we pay the
tuition, can we use the tax credit ?
Any suggestions to maximize this common scenario ?
--
/ _/ _/ _/ _/ _/ _/ _/ _/ _/ _/ _/ _/ _/ _/ _/ _/ _/ _/ _/
No Good Deed -
Goes Unpunished
--
<< ------------------------------------------------------- >>
<< The foregoing was not intended or written to be used, >>
<< nor can it used, for the purpose of avoiding penalties >>
<< that may be imposed upon the taxpayer. >>
<< >>
<< The Charter and the Guidelines for submitting posts >>
<< to this newsgroup as well as our anti-spamming policy >>
<< are at www.asktax.org. >>
<< Copyright (2011) - All rights reserved. >>
<< ------------------------------------------------------- >>
Alan
May 14, 2012, 7:29:03 PM5/14/12
to
On 5/14/12 5:03 PM, ps56k wrote:
> We have a 529 account setup for our son at UW/Madison.... a soph.
> It is setup with the Illinois Brightstart program.
> As yet, we have not drawn any funds from it.
>
> SO - We have deposited $20k into it for a couple years,
> to get the break on the IL state taxes.
>
> How should we handle the upcoming tuition payment for next year ?
> What logistics, paper trail or whatever should we do
> to draw from the 529 (in his name) and then pay the tuition ?
> If we draw the 529 into his checking acct, and pay - there is no real
> benefit as there is no real income ?
> If we draw the 529 into his checking acct, and pay us - and we pay the
> tuition, can we use the tax credit ?
>
> Any suggestions to maximize this common scenario ?
>
First off, you can't double dip on taxes. If you use 529 distributions
> We have a 529 account setup for our son at UW/Madison.... a soph.
> It is setup with the Illinois Brightstart program.
> As yet, we have not drawn any funds from it.
>
> SO - We have deposited $20k into it for a couple years,
> to get the break on the IL state taxes.
>
> How should we handle the upcoming tuition payment for next year ?
> What logistics, paper trail or whatever should we do
> to draw from the 529 (in his name) and then pay the tuition ?
> If we draw the 529 into his checking acct, and pay - there is no real
> benefit as there is no real income ?
> If we draw the 529 into his checking acct, and pay us - and we pay the
> tuition, can we use the tax credit ?
>
> Any suggestions to maximize this common scenario ?
>
to pay qualified expenses, no one can use those same expenses for any
other tax benefit.
There is no paper trail per se. Just withdraw the funds and make sure
that you pay qualified expenses in the same year that the funds are
withdrawn. In other words if you pull the funds out in Dec. 2012, you
will need to have paid qualified expenses in 2012 to avoid paying taxes
on a gain in the account.
--
Alan
http://taxtopics.net
ps56k
May 16, 2012, 11:53:19 AM5/16/12
to
"Alan" <temp...@vacationmail.com> wrote in message
news:jos4fq$o7i$1...@dont-email.me...
room & board.
It looks like the 529 QTP program allows for just about any expense...
So - we might have our son draw on his 529 to pay for the room & board
portion,
and let us pay for the tuition which will be counted for the various 1040
types of tax credit.
Alan
May 16, 2012, 1:33:29 PM5/16/12
to
attendance or taking a course. For the AOC, they also include books,
supplies and equipment required for a course regardless of where
purchased. For the Tuition & Fees deduction, they include books,
supplies and equipment required for a course ONLY if they must be
purchased from the school for a course or attendance.
> It looks like the 529 QTP program allows for just about any expense...
> portion,
> and let us pay for the tuition which will be counted for the various 1040
> types of tax credit.
>
You don't actually pay for room and board. You pay for qualified
> and let us pay for the tuition which will be counted for the various 1040
> types of tax credit.
>
expenses and then there is an allocation method depending upon which
type or types of higher ed tax benefits are being used. See pages 56 and
57 of IRS Pub 970 for the allocation method.
ps56k
May 16, 2012, 4:35:32 PM5/16/12
to
news:jp0od2$sne$1...@dont-email.me...
I had previously downloaded the IRS 970 pub,
and was reading thru it - but will look at pgs 56-57
I was mostly looking at the big ticket items - tuition & room/board -
since UW/Madison is around $25k for out of state (vs in state only being
like $10k)
and was reading thru it - but will look at pgs 56-57
I was mostly looking at the big ticket items - tuition & room/board -
since UW/Madison is around $25k for out of state (vs in state only being
like $10k)
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