NYS Section 529 Plan for Tuition

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Forum -> Parenting our children -> School age children

View latest: 24h 48h 72h

amother

Burgundy

Tue, Dec 26 2017, 3:28 pm

If you open a section 529 plan on or after Jan 2, 2018, you can pay private school tuition from there.

https://www.nytimes.com/2017/1......html

Mommyg8

Tue, Dec 26 2017, 3:40 pm

But the money you put in IS taxed, correct?

questioner

Tue, Dec 26 2017, 3:45 pm

I believe you pay federal income tax, but the first $10,000 is deductible from NY State Income tax.

rachl613

Tue, Dec 26 2017, 4:38 pm

Yes the money you put in is only deductible for your NY state taxes but any growth / interest is free from both state and federal tax if you use it for college and beginning in 2018 for private k-12 school. We just met with the person who helps us with finances yesterday. At least that's what I think hecaaid. He told us a bunch of stuff to do this week because of the new tax law.

amother

Burgundy

Tue, Dec 26 2017, 4:49 pm

My accountant said if we open the 529 in 2018 and use it for paying tuition for our 2 kids we should be able get a deduction of $10,000 on our year 2018 NYS & NYC tax return.

Mommyg8

Tue, Dec 26 2017, 5:07 pm

Is that $10,000 per child, or per family?

amother

Burgundy

Tue, Dec 26 2017, 5:08 pm

Mommyg8 wrote:

Is that $10,000 per child, or per family?

For our 2 children collectively.

doctorima

Tue, Dec 26 2017, 6:04 pm

I got an email from my child's school saying that if you put in the $10K this week, you can use it as a tax deduction for NY state taxes for 2017, even if it won't be used to pay 2018. Does this make sense, and does anyone have a link with any more info on this subject?

doctorima

Tue, Dec 26 2017, 6:05 pm

rachl613 wrote:

We just met with the person who helps us with finances yesterday. At least that's what I think hecaaid. He told us a bunch of stuff to do this week because of the new tax law.

Anything else he recommended that you could share with the rest of us to help us reduce our tax bills?

amother

Burgundy

Tue, Dec 26 2017, 6:06 pm

doctorima wrote:

My accountant said not to open the 529 until Jan 2 2018 or later because only starting Jan 1 2018 will 529 money be able to be used for private school tuition kindergarten through high school.

rachl613

Tue, Dec 26 2017, 6:10 pm

doctorima wrote:

Anything else he recommended that you could share with the rest of us to help us reduce our tax bills?

Well a lot of was based our situation which I don't want write in the public forum. If you want you can private message me and I can tell you my situation more and if ours are similar I'd be happy to explain what he said.

shyshira

Tue, Dec 26 2017, 6:14 pm

doctorima wrote:

Yes that makes sense. You could put the money in now and pay 2018 tuition.

What has changed is what you can do with the money once it’s in there. Not the ability to make the contribution (take the deduction)

You could contribute in 10k today and use it to pay college in 10 years, or private school in 2018.

happy12

Tue, Dec 26 2017, 6:17 pm

If it's not pre tax , what's the benefits putting in and using the funds right away.

rachl613

Tue, Dec 26 2017, 6:20 pm

happy12 wrote:

If it's not pre tax , what's the benefits putting in and using the funds right away.

For NY residents it is pre tax for NY state taxes. Also any interest or growth is not taxed by federal or state if used for college or private school.

amother

Burgundy

Tue, Dec 26 2017, 6:27 pm

happy12 wrote:

If it's not pre tax , what's the benefits putting in and using the funds right away.

You get the NYS deduction at the end of 2018.
It's not a lot but it's something. No NYS taxes (yes federal) for $10k of your income.

amother

Cerulean

Tue, Dec 26 2017, 6:45 pm

amother wrote:

For our 2 children collectively.

AIUI, its $5000 a taxpayer, so $5000 for you, $5000 for your spouse. Total $10,000. It doesn't matter if you have 1 kid or 20.

rachl613

Tue, Dec 26 2017, 6:55 pm

amother wrote:

AIUI, its $5000 a taxpayer, so $5000 for you, $5000 for your spouse. Total $10,000. It doesn't matter if you have 1 kid or 20.

Correct. 10K per couple per year or 5K for single per year.

shyshira

Tue, Dec 26 2017, 7:07 pm

doctorima wrote:

here is the tax bill... the change is for distributions after 2017. When the funds are contributed isn't relevant. (new york may have laws that require the money to stay in the plan for a set period of time. That should be a question to the administrator of your 529)

‘‘(7) TREATMENT OF ELEMENTARY AND SECONDARY TUITION.—Any
reference in this subsection to the term ‘qualified
higher education expense’ shall include a reference to expenses
for tuition in connection with enrollment or attendance at an
elementary or secondary public, private, or religious school.’’.
(2) LIMITATION.—Section 529(e)(3)(A) is amended by adding
at the end the following: ‘‘The amount of cash distributions
from all qualified tuition programs described in subsection
(b)(1)(A)(ii) with respect to a beneficiary during any taxable
year shall, in the aggregate, include not more than $10,000
in expenses described in subsection (c)(7) incurred during the
taxable year.’’.
(b) EFFECTIVE DATE.—The amendments made by this section
shall apply to distributions made after December 31, 2017.

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