General Principles Flashcards
1
Q
EDUCATION FUNDING
Options During Funding Years
A
- UGMA/UTMA
- child owns, subject to Kiddie Tax if under age 24
- EE Education Bonds
- Parents own bond (can’t use in UGMA/UTMA)
- Coverdell Education Savings Plan (ESA)
- Contribution limited to $2k total
- Section 529 Plan (QTP)
- 2 Types: College Savings or Prepaid Tuition
- $15k contribution per year per child x 5 years For $75k total
2
Q
COLLEGE FUNDING
Options During College Years for “Wealthy”
(Grants and/or Loans)
A
- PLUS Loans
- Parent Loan Undergraduate Students
*Remember - Wealthy Parents are a PLUS*
3
Q
COLLEGE FUNDING
Options During College Years for “PooriSh”
(Grants and/or Loans)
A
*$60k income cap*
- Pell Grants
- Supplemental Education Opportunity Grant
- Subsidized Stafford Student Loans
4
Q
COLLEGE FUNDING
Options During College Years:
Coordination Rules regarding Tax Credits, Distributions, Withdrawals
A
Cannot be combined for same child/expense - USE ONLY ONE
- American Opportunity Credit (AOC)
- Lifetime Learning Credit
- Coverdell Withdrawal
- 529 (QTP) Distribution
*Dont select more than one tax-advantaged sorce to pay for the same college expense, like tuition.*
5
Q
COLLEGE FUNDING
American Opportunity Credit (AOC)
A
- $2,000 + 25% of next $2,000 of expenses (MAX $2,500 tax credit)
- MAGI Phaseouts apply (Given on Tax Sheet)
- First 4 years of college only
6
Q
COLLEGE FUNDING
Lifetime Learning Credit
A
- $2,000 max (up to 20% of $10k)
- Can be used for any high learning institution
(undergrad, graduate, continuing ed) - MAGI Phaseout applied (Given on Tax Sheet)
7
Q
COLLEGE FUNDING
Coverdell Withdrawal
A
- Must be used before student is 30
- MAGI Phaseout applies (Given on Tax Sheet)
8
Q
COLLEGE FUNDING
529 (QTP) Distribution
A
- Tax Free if used for qualified education expenses
- $10k per year for K-12
- $10k towards student loans
- No MAGI Phaseout
9
Q
COLLEGE FUNDING
Options During Graduate Years
A
- Fulbright Scholarship
- Stafford Loan
- 529 Distribution OR Coverdell withdrawal (coordination rules apply)
