14 THE QUEENS COURIER • MAY 4, 2017 FOR BREAKING NEWS VISIT WWW.QNS.COM TAX TIPS Thinking about paying for college? BY JOHN SAVIGNANO It’s springtime, the weather’s turning milder...And many families are thinking about college. Some have high school students who are knee deep in the thicket of touring colleges, choosing schools and applying for fi nancial aid. Others have younger kids or grandchildren and want to stash away a nest egg to fund the kids’ future higher education expenses. Saving or paying for college can be costly. Let’s look at the help off ered by the tax law. The 529 College Savings Plans: Th ere’s no federal tax deduction for payins. Contributions are treated as gift s to the benefi ciary, but with a special twist. You can shelter from gift tax up to $70,000 in contributions per benefi ciary ($140,000 if your spouse joins in) in a single year. If you contribute the maximum, you use up your annual gift tax exclusion for the current and four subsequent years. Th e gift isn’t irrevocable, but the money is out of your estate for estate tax purposes. Many states let residents deduct all or a portion of payins made to their state’s 529. Tax-deferred earnings are tax-free when used for postsecondary education. Eligible expenses include the cost of tuition, books, supplies, fees and computers. Room and board also qualify if the student is enrolled in the school at least half-time. Coverall Education Savings Accounts As with 529 plans, distributions from them are taxfree if the funds are used for education expenses. Annual payins are capped at $2,000, full contributions can be made by marrieds with adjusted gross incomes up to $190,000...$95,000 for singles. You can set up both a Coverdell and a 529 college savings plan for the same child. If you have savings bonds, think about using them to help pay for college. Generally, interest on savings bonds must be reported as income on the federal return in the year the instruments mature or when they are redeemed, whichever is earlier. Interest on EE and I bonds used to pay for education may be tax-free, provided certain requirements are met. The bonds must have been purchased after 1989 by taxpayers who were at least age 24 in the month before they bought the bonds. The bonds must be redeemed to pay for college or graduate school tuition and fees for the taxpayer, spouse or dependent. Vocational schools also qualify for the break. Room-and-board costs aren’t eligible expenses for this purpose. Additionally, the bonds are required to be in the taxpayer’s name, not the name of the child. Relatives or others can pay tuition directly to a school, free of gift tax. The payment doesn’t count against the $14,000-per-donee annual gift tax exclusion or the lifetime estate tax exemption. It can be a nice present for a college student. Please contact us if you have any further questions. John Savignano is a partner with Savignano Accountants & Advisors located at 47-46 Vernon Blvd., Second Floor, in Long Island City. For questions, dial 718-707-0955. JOHN J. CIAFONE, ESQ. MILLION DOLLAR ADVOCATES FORUM THE TOP TRIAL LAWYERS IN AMERICA TM Your Partner in the Struggle For Justice Admitted in NY NJ and Washington DC Attorney At Law 25-59 Steinway Street Astoria, NY 11103 718-278-3900 johnjciafone@yahoo.com Voted Best Attorney from
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