One of the most valuable things in the world is a good education – and President Donald Trump’s new tax law is helping American families save money when it comes to paying school bills and learning.
But navigating the new law, especially as the tax deadline of April 15 approaches, can be a bit tricky. And that’s where how-to-books like Eva Rosenberg’s best-seller, “The Trump Tax Cut: Your Personal Guide to the New Tax Law,” can help.
“It’s important that taxpayers begin to understand how the Trump tax law changes their tax situation,” Rosenberg says. “The changes in the tax code are sweeping and will affect every individual.”
Check out the FREE Offer for "The Trump Tax Cut" – Click Here Now
She says the new law expands the use of the so-called Section 529 accounts, which are tax-advantaged savings and prepaid tuition plans that help people to save for future college expenses.
These accounts, sponsored by state agencies and educational institutions and authorized by the Internal Revenue Service code, will now allow larger “qualifying distributions” of up to $10,000 per student during any taxable year.
The distributions can be used for tuition costs at public, private and religious colleges and universities, as elementary and high schools.
Under the Trump tax law, employer-assisted tuition remains tax free, with your boss allowed to contribute up to $5,250 a year toward your continuing education.
As well, the deduction for student-loan interest – up to $2,500 – is unaffected. But as Rosenberg explains, there are a number of strings with this deduction.
“That includes a limit to the amount of modified adjusted gross income (MAGI) you may have before your deduction is reduced or eliminated,” Rosenberg says.
“In fact, suppose you felt the interest rate was too high and you were able to refinance the loan at a better interest rate? You might have just changed the nature of the loan from a student loan to a personal loan. Interest on personal loans is not deductible at all – so be very careful.”
In addition, the new tax law retains a teacher deduction of $250 a year for money out of their own pockets spent on school supplies.
And for those who home school their children, Trump’s tax law comes through, allowing up to $10,000 worth of distributions from 529 plans, per student, to cover certain costs of homeschooling.
Rosenberg also warns that scholarships, while a welcome financial relief, aren't necessarily tax-free under the law.
“You can use these funds to cover the costs of tuition, fees, books and supplies, and mandatory course equipment. But if the scholarship covers more than that like food, housing costs, travel, or optional equipment, you now have taxable income,” Rosenberg says.
She also suggests that those with outstanding student loans should consider working them off, instead of paying them off, through a number of federal and private programs that will reduce or eliminate them in exchange for a few years of your time.
Note: "The Trump Tax Cut" is the #1 Amazon best-selling tax guide revealing hundreds of deductions, loopholes and strategies for the new tax law. Check out the FREE Offer – Go Here Now