Chapter 5. How to Maximize Savings for Education
To pay for a child's quality education, many parents will do just about anything, even spend their life savings, assume second mortgages, and work multiple jobs if that is what is necessary. It gets harder and harder to keep up with college tuition rates that are growing far faster than the inflation rate.
Fortunately, the Tax Code offers some real incentives to help parents fund their children's education. This chapter describes a number of helpful tuition‐financing techniques. Despite the fact that there are more available tax breaks, the best advice is to put aside as much as you can, as early as you can.
Until recently, many of the education tax incentives were not available to those with higher incomes. Now, families with higher incomes can take advantage of some tax breaks, including what is by far the best educational tax break, the much‐improved Section 529 plan. Also, many of the restrictions that previously prevented taxpayers from bundling various education tax breaks together in the same year have been eliminated.
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