If you have any questions about your school expenses or college saving plan, please feel free to call us at 51 or book a time on our calendars here. In general, although we like the 529 plan for college savings, if your intention is to use the 529 plan for K-12 costs as a NY resident, then the NY 529 plan is likely not a great idea.
For those wanting more personalized advice, I recommend speaking to an international tax accountant. What are the limits 10,000 for married couples filing jointly 5,000. tuition program (such as New York’s 529 College Savings Program) are considered qualified college tuition expenses for purposes of Form IT-272. Americans living abroad can continue to invest in a 529 Savings Plan and this money can cover expenses at eligible foreign institutions, but be aware of how your country of residence taxes your withdrawals. In the case of this unqualified withdrawal, you essentially must “give back” the tax deduction that you took on your NYS tax return and pay NY state tax on the gains earned. Note that this does not apply to withdrawals made for college.Īgain, the distinction is on withdrawals made for college costs versus K-12 costs. Qualified expenses also include K-12 tuition of up to 10,000 per year per beneficiary.
In New York State, when you put money into a 529 plan, you get a deduction against your state taxes, up to a total contribution of $10,000. Let’s say that your NY state tax rate is 6%, this $10,000 contribution essentially saves you $600 (6% on $10,000). The wrinkle is that, in NY, if you withdraw the funds from the 529 account for K-12 expenses, NY state treats that withdrawal as an unqualified withdrawal. Let’s set some context. Up until fairly recently, 529’s were generally only used to pay for college expenses such as tuition, board and books. A change was made that allowed participants to use up to $10,000 per year to pay for K-12 expenses for children in private schools. The trickiness comes down the fact that not all states treat K-12 withdrawals the same. Here at Simmons Capital Group, we generally really like 529 plans to save for college. College is one of the hardest financial goals to save for, so any type of account that offers tax benefits and allows the funds to grow faster is generally a plus. There is however, one scenario in which 529’s may not be the best bet for your family. This includes expenses paid from a qualified state tuition program (like New York's 529 College Savings Program).
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