By: Gianna Conte, CPA
Gianna Conte, CPA is a supervisor in the tax department and has been with Grossman St. Amour CPAs since 2016. Her areas of expertise include income tax return preparation, payroll and sales tax return preparation, financial statement preparation, and bookkeeping. She works with clients in the retail industry, physicians and medical practices, individuals, and various other industries. For more information regarding tuition planning and 529 plans, contact Gianna at 315.701.6337 or [email protected].
One of the biggest questions parents ask themselves as their children approach high school graduation is: “How are we going to pay for our kids to attend college?” With the cost of college constantly on the rise, this is becoming an even bigger challenge for many families. One great savings method available to parents is a 529 College Savings Plan.
A 529 Plan is a tax-advantageous investment account to be specifically used for education costs. The designated account beneficiary is the student who will eventually attend college, and the owner of the account can be the parents, grandparents, aunts, uncles, etc. of the student, or the student himself/herself. A single student can be the beneficiary of multiple accounts at one time.
A great benefit of this type of investment account is that the earnings grow tax-free, and can be withdrawn tax-free if used solely for qualified education expenses. These qualified expenses include tuition and fees; room and board; and any required books, supplies, and equipment. With the passing of the Tax Cuts and Jobs Act, these accounts can also be used to pay for K-12 private education expenses in certain states. Unfortunately New York State is one of the states that does not allow the funds to be used for this purpose.
A big tax advantage for this type of account is that states allow taxpayers to take a deduction for the amount of contributions that they make to the account during the year. For New York State, filers who are married filing jointly can deduct up to $10,000 of contributions, and single filers can deduct up to $5,000 of contributions. These amounts are a total across all accounts contributed to, not per account or per beneficiary.
A common question relating to these plans is: “What if my child decides not to go to college? What happens to the money in the 529 Plan?” Another advantage to this type of account is that the beneficiary can be changed. The account can be transferred from child to child, or child to grandchild, which increases the chances that the funds will ultimately be used for education purposes.
For more information relating to 529 plans visit www.collegesavings.org or contact Gianna Conte, CPA at 315.701.6337 or [email protected].
Grossman St. Amour CPAs PLLC has been in business for over 60 years! As a certified public accounting firm located in central New York, Grossman St. Amour CPAs provides businesses and individuals with accounting, audit, taxation, business planning and valuation, financial planning, investment consulting, and fraud examination and deterrence services. For more information about how Grossman St. Amour CPAs PLLC can be of service to you, contact [email protected] or call 315.424.1120.
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