February 07th, 2016

TAX TIP OF THE DAY...  deduct 529 college plan contributions

PA allows each taxpayer to deduct 529 college plan contributions up to $14k per student each year.  If you want to contribute even more...  double it by having each parent contribute $14k toward the child's 529 account.  The deduction is not limited to your own children.  You can deduct contributions to the 529 accounts of grandchildren, nieces & nephews, neighbors, friends, etc.

OTHER STATE'S 529 PLANS:
The deduction is not limited to the PA TAP program.  You can use contributions to any other state's 529 plan as well.

GRANDPARENTS MAY NOT BE IDEAL CONTRIBUTORS:
Keep in mind that a retired 529 contributor may not have any PA tax liability and therefore would gain no PA tax benefit from a 529 contribution.  So it may be better for a grandparent to gift the funds to their working child...  who could gain a PA tax benefit by contributing the funds to the grandchild's 529 account. 

SHARE WITH A FRIEND. 
If you need a tax appointment... www.baboiancpa.com