AS WE MOVE CLOSER TO AUGUST, it’s time to mark your calendars for your “back to school sales tax holidays” – which are now expanding to cover just about everything in some states. In previous years, this sales tax holiday provided a couple days for shoppers to ravish the malls and department stores for clothing and school supplies. In states like Louisiana, you can purchase anything up to the price of $2,500 without tax being imposed, including guns! However, here in South Florida, your tax breaks will cover the standard clothing and school supplies, as well as computers and tablets (priced up to $750).
Florida state Rep. Larry Ahern, stated “[w]e are trying to take some of the burden off Florida families as they prepare for their children going back to school in August.” Speaking of burden’s – if you are participating in back-to-school tax savings, your child’s college years are probably just around the corner! While you can shop ‘til you drop every year, there are other tax planning techniques that can be used to save for your child’s college expenses, while avoiding those pesky mall folk!
The 529 Plan – a 529 plan allows you (or really, anyone) to contribute to an account to save for your child’s college education, and it is not subject to federal taxation. There is no age limit for when the plan can be used, and it can roll over to another family member. You can maintain control beyond your own natural years by appointing a guardian/trustee to manage it upon death. Not only do you avoid tax on withdrawals, but any capital gains are tax-free as well. Also, as an alternative, the Florida college savings plan is the largest prepaid plan in the nation.
No Generation Skipping Tax for College Payments – Lets say that you want to assist your grandchild in broadening their minds and finding a career path. You can create a trust, and give the trustee (you can be the trustee) a power to distribute the money for your grandchild’s tuition. This means, your trustee power is limited by an ascertainable standard, and may not be included in your gross estate (aka, you are not taxed on the amount).
So while stretching your legs for the mall-marathon that will be taking place in South Florida on August 2-4, take a moment to consider the significant tax-free benefits of planning ahead for your child’s college education!
For more information on successful Florida estate planning and asset protection techniques, please contact the South Florida law firm of Wild Felice & Partners, P.A. at 954-944-2855 to schedule your free consultation.
It’s a Wild world. Are you protected?SM