As everyone knows, the cost of higher education rises each year. While many of us are already familiar with 529 plans and education IRAs, many don’t realize that contributions to these plans do not generate any tax deduction for the donor.
A technique used by some businesses and self employed individuals is to employ their children in the business. That way, they can generate a tax deduction for themselves, and save for the future since the net pay, or a portion of it, can be deposited into a savings or IRA account.
Of course, the child has to be legally employed and paid a wage that is comparable to the work performed but this way can be very advantageous for self employed individuals.
We can design strategies to help our clients save for their child’s future and manage their tax return. Please call the office if we can help you.
Tags: Education Costs
Written by: Doug Rodrigues