August Means Back to School
School expenses and tuition are on the top of everyone’s minds right now. If you are sending a tuition check to a k-12 school, college, or university, you are going to want to read this. This is beneficial information for parents and grandparents!
In a previous blog about the 2018 Tax Plan, we touched on the tax benefits of contributing to a Future Scholar 529 plan. In this article we will go into further detail by outlining how you can save on your South Carolina State taxes this year while saving for your child’s future.
In this example, you could save $700 on your SC taxes if you were to pay a $10,000 tuition using a Future Scholar 529 plan, assuming you are in the 7% tax bracket. Please note, your actual tax savings may vary based on the amount of the contribution, your income and your income tax bracket.
How does it work?
FinTrust will set up a Future Scholar 529 plan in your name for the benefit of the student, if you do not already have one. We will then deposit your $10,000 tuition check into this account. These funds will be marked for a low risk, short-term investment option like cash or a money market fund.
After 10 days, we can call Future Scholar to let them know you have a qualified education expense and they will send you the $10,000.
What does this mean for me?
This sounds like a roundabout way to pay tuition but doing this will reduce your taxable income by $10,000. If you are a South Carolina resident using a Future Scholar 529 plan, these steps will save you money at tax time.
For a contribution of $10,000, you will save $700 on your South Carolina state taxes.
This is a service that we provide at FinTrust and we would be happy to help you get started. Contact your advisor by email or call the office to get started.
Here’s a list of qualifying expenses:
- Tuition and fees
- Room and board
- Books, supplies and equipment (including computers) required for enrollment in or attendance at an eligible higher education institution
- Effective January 1, 2018, families may withdraw up to an aggregate of $10,000 a year per beneficiary tax free to cover K-12 tuition at public, private or religious elementary or secondary schools. Account Owners are responsible for monitoring and complying with the $10,000 aggregate limit for such expenses.
If you have any questions or would like to talk to a FinTrust team member, call us, email us, or complete the contact form on this page.
*FinTrust Capital Advisors, LLC and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only; and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.