Tax Reform Changes the Way Parents Can Pay for School in USA
On December 22, Tax Cuts and Jobs Act was signed to bring about numerous changes in the tax structure of US. The families are now allowed to make tax free withdrawal up to $10,000 per year to pay for the tuition fee of their children. 529 savings plan allows parents or guardians to set aside savings that are not taxed, for the education of their children.
The changes in this tax reform now allows parents to make tax free withdrawal from this plans but the full impact made by these tax alterations remain to be seen and will only be realized with time. Parents can now use the 529 plan to pay the tuition for K-12 education, which was previously not allowed under this plan. But now that they have this option, parents on a wide scale are thinking of shifting their children from public to private schools for improved quality of education.
However, specialists are warning parents to weigh their respective circumstances and plan accordingly. If they believe that their child would not be needing all of the funds from the 529 plan, then investing in private schools can be favorable, otherwise not.