Southfield, Michigan (PressExposure) April 19, 2008 -- Markwei Boye is a financial planner and CEO of Smart Financial Advisors, P.L.L.C, an independent personal financial planning and investment advisory firm. He is an Adjunct professor at Cornerstone University and Baker College School of Business teaching primarily business courses including Small Business Management, Personal Financial Planning and Taxation. He has written many articles on strategic financial planning for everyone, from college students to entrepreneurs and large corporations. The following is great information for planning and saving for higher education costs.
Students and their parents can capitalize on a number of different education benefits. For example, the maximum amount that can be contributed to a Coverdell Education Savings Account (formerly an Education IRA) each year is $2,000. Any family member with adjusted gross income below $190,000 in a joint return or $95,000 in a single return can contribute toward the $2,000 maximum annual addition to a Coverdell account, where the contribution will grow tax-deferred, until withdrawn for any of a liberal list of education costs -- even private elementary and secondary tuition. At higher income levels, the maximum contribution is reduced.
State-sponsored prepaid tuition plans (Section 529 plans) offer an attractive way to accumulate money to pay higher education costs. Both public and private institutions sponsor tuition savings plans. Parents, grandparents, or other interested parties typically contribute up to $12,000 per year each to such plans and with income accumulating tax-free, those plans can grow to be significant sources of funding for educational purposes. Funds withdrawn from Section 529 plans are totally free from federal income tax if they are used to pay qualified higher education expenses.
Hope and Lifetime Learning credits are also available and several funding sources can be coordinated in order to pay as many costs as possible with tax-favored dollars. An education expense deduction for up to $3,000 of education expenses that are not paid from a Section 529 plan or a Coverdell Account and don't qualify for the Hope or Lifetime credit, is available for taxpayers with modest incomes. That deduction is available whether the taxpayer itemizes deductions or not, but begins to phase out at adjusted gross income levels in excess of $47,000 ($94,000 on a joint return).
Planning education funding for you, your children, or your grandchildren may involve coordinating five tax law provisions -- six, if you count the tax-free redemption of Series E bonds to pay higher education costs, and you might want some help.
Markwei Boye has studied these provisions and he is well qualified to assist you. Visit [http://smartbusinesspllc.com/default.htm] to learn more about his services.