Will new tax plan benefit private schools?

southernbubby

Sun, Dec 03 2017, 8:12 am

https://www.washingtonpost.com.....d76d2

Apparently private school tuition will be able to be payed out of pre-tax dollars up to $10K, while local school taxes can no longer be deducted.

I wonder if grandparents can set aside $10K that cannot be taxed in order to help their children finance private schools.

Apparently public school advocates are fuming.

youngishbear

Sun, Dec 03 2017, 9:40 am

shantelle wrote:

I don't see how it benefits the schools specifically but it will definitely benefit the parents! When does it take effect?

It's the Senate version of the tax bill. The House version was different. They now need to be reconciled before we can start marking our calendars.

I wonder what the final version will end up with.

I also wonder what the net gain will be for New Yorkers who will no longer be able to deduct state and local taxes from their federal bill.

doctorima

Sun, Dec 03 2017, 10:06 am

I hadn't heard about this - thanks for bringing it to my attention! The article says that it's very similar to a provision in the House bill, so hopefully it will stay. Are there any limits on income or contributions? I don't currently have a 529 for my kids, but I'm wondering if I should set one up in 2017 if there will be limits on how much I can put into it in 2018.

shantelle

Sun, Dec 03 2017, 10:12 am

It looks like the contribution limit is $10k but no income limit (as a matter of fact, it will primarily benefit people with higher incomes, as they're the ones who can afford to send their kids to private schools).

southernbubby

Sun, Dec 03 2017, 10:15 am

doctorima wrote:

The limit for that, I think, is $10K. I don't know how it works, but I would imagine that it is specific for each child. I think that if I wanted to do it, I would have to maybe shelter $1000 each for 10 grandchildren and then rotate years so that nobody gets slighted. Maybe parents themselves would simply list one or two children because it is all the same to them.

youngishbear

Sun, Dec 03 2017, 10:19 am

shantelle wrote:

But isn't the point of the OP's question whether it will benefit frum people who send to private school regardless of income?

shantelle

Sun, Dec 03 2017, 10:41 am

Judging by dcra and FSA and HSA accounts (which are similar in that you can take off x amount of $ from your paycheck to use for health or childcare expenses), I don't think it will be specific for each child (meaning you can use all the $ for one child or divide between a few, it doesn't make a difference).

Incidentally, you can't use any of the above (dcra, HSA) for people who are not your dependents and I assume this will be the same so southern hubby, I don't think you will be able to do what you're considering. But of course I can be wrong on that.

And yes, youngish bear, you are right, although it will primarily impact high earners, in the frum community (and outside of it too although outside the frum community lower income earners typically don't pay private school tuition) it should impact anyone who pays taxes.

happy_tobeme

Sun, Dec 03 2017, 11:21 am

shantelle wrote:

Contributions to a 529 account are not deductible on federal taxes, some states do allow it though. (So it’s not similar to FSA and HSA accounts). The benefit is that earnings in a 529 plan grow federal tax-free and will not be taxed when the money is taken out to pay for allowed expenses.

leah233

Sun, Dec 03 2017, 12:52 pm

The new tax plan will probably hurt tzedokas, schools included. Even though donations are still deductible there will be far less people itemizing with it. Therefore the tax deductible benefit of donations as a practical manner will be lost for many people

leah233

Sun, Dec 03 2017, 2:40 pm

octopus wrote:

dh is very nervous about the new tax plan. My taxes are going to go way up.

Why would they go way up? I don't like this tax plan at all but the most I see it going for anyone is a little. Unless you are a major itemizer ,have major student debt etc.

Mommyg8

Sun, Dec 03 2017, 3:00 pm

shantelle wrote:

I don't know if that's necessarily true. You'd be surprised as to how many middle class people send to Catholic schools, or WOULD send to Catholic schools if this bill was passed.

Mommyg8

Sun, Dec 03 2017, 3:04 pm

leah233 wrote:

Why would they go way up? I don't like this tax plan at all but the most I see it going for anyone is a little. Unless you are a major itemizer ,have major student debt etc.

Student debt does not need to be itemized, as far as I know, so that would not be an issue.

The people who will be hit the hardest by this new bill are those who live in high tax states such as New York and California, AND have huge mortgage and property deductions. Those who will win will be renters and low to mid income people.

octopus

Sun, Dec 03 2017, 3:27 pm

Mommyg8 wrote:

This is why my taxes will go up. I have also heard that it doesn't matter how many dependents you have it is all based on income. So whether you have one dependent or ten it doesn't matter. Could be I heard wrong. I am not a financial person really.

leah233

Sun, Dec 03 2017, 3:28 pm

Mommyg8 wrote:

The house version of the bill eliminates the student loan interest deduction. It has a $2,500 limit now
.
The loss of personal exemptions will not make winners out of renters and low to middle income families. Even if they don't end up paying more

leah233

Sun, Dec 03 2017, 3:30 pm

octopus wrote:

That is correct but there is also a bigger child tax credit. If you are so high income that you don't qualify for the CTC you will benefit from lower tax brackets

Mommyg8

Sun, Dec 03 2017, 3:42 pm

leah233 wrote:

I didn't realize that they were planning on eliminating the personal exemptions. That's bad. And why in the world would they be eliminating the student loan interest deduction? Are they so, so out of touch?

The way the plan started out, it looked good for lower income Americans. Now they tweaked it, as they always do, to benefit higher income taxpayers. The system is rigged!

Every time they pass a new bill, it's ALWAYS to benefit the rich. Every time. Because - who else can afford the lobbyists?

octopus

Sun, Dec 03 2017, 4:27 pm

Mommyg8 wrote:

The rich have lobbyists, the poor have democrats who will fight for their programs, and the hard working middle class gets the brunt of it.