2nd Quarter 2019

The Tax Cuts and Jobs Act (TCJA) changed funding a child’s education significantly. Here are five factors to consider.

  1. You can now pay tuition for kindergarten through 12th grade at private, public, or religious schools with money saved in tax-advantaged 529 college savings accounts.
  2. You can now draw up to $10,000 federally tax-free per student from a 529 plan to fund K-12 tuition expenses. There is no ceiling for distributions from a 529 plan for college expenses. While contributions are not deductible, earnings can grow free of federal income tax on withdrawals used for qualified school expenses.
  3. You are not only limited to 529 plans sponsored by your state and can choose from a long list of 529s sponsored by other states.
  4. The TCJA axed taxes on alimony payments, so custodial parents should have it easier qualifying for need-based aid.
  5. Tax deductions for interest on home equity loans and lines of credit were eliminated. These were major sources of education funding, and losing their deductibility may require a change in your college funding plan.

Education tax breaks were boosted overall by the TCJA, but you almost must be a financial professional to navigate the complexities confidently. We are here to answer questions and help you create a strategic plan.

Kim Scott CFP®


FSA’s current written Disclosure Brochure and Privacy Notice discussing our current advisory services and fees is available at www.FSAinvest.com/disclosures or by calling 301-949-7300.



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