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";s:4:"text";s:5422:"The latest articles and tips to help parents stay on track with saving and paying for college, delivered to your inbox every week. You may also have to repay any deductions or credits claimed. Accessed April 28, 2020. How to Use a 529 to Pay for Private School Tuition Tax reform allows parents to withdraw up to $10,000 per year for private K-12 education. And college, by comparison, costs much more than elementary or secondary school. "Average published charges, 2018-19 and 2019-20." The Tax Cuts and Jobs Act of 2017 initiated a number of tax changes, including updates to 529 plans. Our opinions are our own. How To Save For College: The Order Of Operations Parents Should Follow, How To Pay For College: The Best Order Of Operations, The Ultimate Guide To Military And VA Education Benefits To Pay For College. At The College Investor, we want to help you navigate your finances. One last thing to keep in mind. 529 plans can be used for private elementary and high school tuition. The new tax law also allows tax-free rollovers from traditional 529 savings accounts to 529 ABLE accounts. All Rights Reserved 444 Brickell Avenue, Suite 820 Miami, FL 33131 Phone: (585) 286-5426, 529 savings plans and private school tuition, 529 Savings Calculator for Private K-12 Tuition, Revised Pay As You Earn Repayment Calculator, 529 plans can be used for private elementary and high school tuition, States that consider K-12 tuition a qualified expense, A 529 account can be rolled over to an ABLE account, What was not included in the tax reform law, Calculate how much you need to save in a 529 plan to cover private school tuition costs, 529 plans offer tax-free earnings growth and tax-free withdrawals, 30 states offer a tax credit or deduction for contribution to a 529 savings plan. The states listed below have conformed to the federal tax code. For 2020, the annual exclusion is $15,000 per child. Are There Disadvantages of 529 Plans for College? The individual must also be receiving benefits under SSI and/or SSDI, or be able to obtain a disability certification from a doctor. This rule allows you to make five years' worth of contributions at once, up to the annual gift tax exclusion limit. Accessed April 28, 2020. For parents who aren't able to front-load an account, get a later start on saving or are contributing well below the annual gift tax exclusion limit, withdrawing $10,000 each year for private school could leave their child short when it's time to pay for college expenses. Tax Deductions and Tax Breaks for Private Schools, Here Are the Tax Benefits of West Virginia's 529 College Savings Plan. For parents, however, the question is whether it makes sense to use 529 plan withdrawals to cover these costs. Don't Get Hit With Taxes and Penalties on College Savings. Using 529 Plan Withdrawals for Private Education. The Tax Cuts and Jobs Act, which was signed into law in December 2017, allows families to use 529 plans to pay for up to $10,000 in tuition expenses at elementary or secondary public, private or parochial schools. Over 30 states offer a tax credit or deduction for contribution to a 529 savings plan. The 2017 tax reform package expanded 529 plan benefits to include tax-free withdrawals for private, public or religious elementary, middle and high school tuition. State Treasurer Curtis Loftis recognizes the September 2020 SC Financial Literacy Master Teacher Program Educator of the Month. Allowing 529 plans to be used for homeschooling expenses. Don’t see your state listed? This doesn’t influence our evaluations or reviews. Next, the annual contribution limit to a Coverdell ESA is capped at $2,000 for 2020 and the maximum lifetime contribution to one of these plans is $36,000 per child. At first glance, the expansion of 529 plan withdrawals seems like an obvious benefit. "Frequently Asked Questions About Gift Tax." Internal Revenue Service. Your feedback matters! Previously, qualified 529 plan withdrawals were limited to withdrawals used to pay for higher education expenses at eligible colleges and universities. 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