Coaching Key Concepts Flashcards
EE Bonds
Owner is mom and dad redeem before age 24 AGI threshold -140,000 ish redemption is tax free if proceeds go for tuition and fees, note room and board don't put in UGMA Not a gift
Coverdell ESA account
Higher AGI limit
$2000/per child per year
no contributions after age 18
no deductions to contributions
must distribute or change bene after age 30
tax deferred growth
Purpose: elementary, tutoring, computer, room and board
UTMA/UGMA
Kiddie tax applies to not attained age 24
child’s assets
custodian dies = back into estate
when cease to be a minor-assets pass to kids
savings bonds can be in a UTMA account, but they cannot qualify for the educational expense exclusion. if redeemed for college, interest is taxable.
529
2 kinds
1) state program
switch states 1 time per year, not a good answer is client wants to “maintain control”, non-deductible, grow tax deferred, college, fee, room & board, no income limits. limited to gift exclusion = $14,000 X 5
Regarded as a gift of Present Interest to child, but it is Revocable.
how much comes back into estate if they do the upfront funding?, they prorate. 3/5.
2) prepai
Learning Credits
American Opportunity Credit = $2500 - used 1st 4 years of college
for 2013 there is a $4000 deduction alt (65K single ,130 jt) or $2000 deduction (980 S 160 Jt)
Life time learning credit = 2000 - can use forever, trade school whatever
for incomes in the 60,000 per year range.
Perkins Loan - school - decides, 4,000 each year up to 20,000, grad or undergrad
Pell Grant- pay back - needs based 5,500 Undergrad only full time
Plus - it is a real loan and must be paid back for higher incomes, can borrow the entire cost of college, for rich people
Stafford - avail also for graduate student
see above
Coordination rules
can’t use any combination of the American Opportunity Credit, Lifetime Learning Credit, Coverdell ESA, and Qualified tuition distribution in any one year due to the coordination rules.
Fiscal Policy Think
Taxes and Spending
Congressional
