Time flies! We all know that. One day you’re changing a diaper and the next you are buying a mini refrigerator for the dorm room. Make paying for that dorm room a bit less painful.
The earlier you start setting aside money for college the better. Putting away money from day 1 of your child’s life and doing automatic deposits monthly can really add up. Those kids will be grown up before you know it.
There is an option called a 529 Plan for saving for college. It’s a Qualified Tuition Program.
- No federal tax break when contributing but growth is tax free and distributions and earnings are generally tax free when withdrawn for qualified expenses.
- Ohio tax break of $2,000 per beneficiary PER YEAR when using the Ohio plan which is from CollegeAdvantage . Excess contributions can be carried over and deducted in future years.
NOW FOR THE EXCITING NEWS:
- You can use the distributions for costs other than tuition: room & board, book, supplies, and equipment. Computers qualify if the computer technology is required for enrollment or attendance.
- NEED A GIFT IDEA? It isn’t only parents that can contribute and get the Ohio deduction. An Ohio resident can contribute for a child that isn’t on their tax return and still get the deduction.
Careful!! There is a penalty for taking out funds and using them for non-qualified expenses.
Here is some handy IRS Q & A on Qualified Tuition Programs.