Monday, April 09, 2007

Monday Quick Tip: Tax Tips for All Ages

The IRS posts a tip each day about taxes. This newsite has gathered all the tips in one place. You can scroll and skim for the tips that apply to you and your family.

I always review family finances in general around tax time. I can do this because hubby generally prepares the taxes. This year, I'm investigating 529 college savings plans. Here's a quick tip from Money magazine: Check into your state's 529. Does it offer deductions for contributions to its 529 plans? Mine, and many others, do not. Oh, sure, they'll tout that they "don't put income tax on earnings used for qualified expenses," but that's the very definition of a 529 - nobody taxes the earnings if they're used for qualified expenses.

If there are no tax benefits, then investigate another state's plan. It doesn't matter where you invest - you can use the benefits in any state, at any college. If there aren't tax deductions with your state, you may be better off going elsewhere. The key is to look at the expenses in managing and opening the fund.

Money suggests the Utah 529. I looked into it and thought the Virginia 529 plan also offered similar benefits, so I'm looking into both. Either plan offer great management, low expenses and are top picks.

You can research 529 funds at SavingforCollege.com.

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