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Georgia 529 tax question

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  • southerndoc
    replied
    I read that it wasn't allowed to use Georgia's Path2College plan to pay for student loans, but I think the article I read was written before Georgia adopted the change. The official documentation from Georgia's website says it can be used up to $10k.

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  • spiritrider
    replied
    Originally posted by Tweedlebee View Post
    Maybe this changed, but I thought the Secure act made student loan payment up to 10k a qualified education expense?
    You are correct, temporary amnesia.

    There is a $10,000 lifetime limit per beneficiary. Each student or their sibling(s) have a separate limit.

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  • JBME
    replied
    Originally posted by Tweedlebee View Post
    Maybe this changed, but I thought the Secure act made student loan payment up to 10k a qualified education expense?
    yes this is true. The $10k is a max though. You can't use $10k per year out of a 529 to pay down student loans

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  • Tweedlebee
    replied
    Maybe this changed, but I thought the Secure act made student loan payment up to 10k a qualified education expense?

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  • spiritrider
    replied
    Responding to some of the above questions.
    • There is only one GA tax deduction per beneficiary. It does not matter how many accounts.
    • The rest of the issues are rooted in federal law. GA may follow, but federal law determines federal taxes.
      • Each 529 account has a single account owner with a single beneficiary.
      • You can not "add" a beneficiary. You can only change the beneficiary of an account or rollover to another beneficiary's account.
      • Only a change or rollover to a new beneficiary of a "lower" generation is subject to gift tax reporting. The same or higher generation is not.
      • Loan payments are not a qualified education expense.
      • There is no requirement for 529 accounts to only be used for your children. Anyone including the account owner can be a beneficiary.

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  • ENT Doc
    replied
    It appears that you can establish your own 529, contribute, take the deduction, and either transfer to your child (as part of gift exemption total) or save for your own use.

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  • southerndoc
    replied
    I found that the Georgia Path2College plan doesn't allow payment of student loans. So that answers that question.

    Still leaves the question if I can use leftover funds for my own education or if I can establish a fund for myself and reap deductions for two beneficiaries (my daughter and myself) for a planned masters program in 5-10 years.

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  • southerndoc
    replied
    On another note, can I open a second account, list myself as a beneficiary, and use any contributions to pay for my own education expenses? Basically since I only have one child, can I take $16k/yr in deductions from state taxes and use my own account to pay for my masters?

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  • southerndoc
    replied
    Originally posted by jfoxcpacfp View Post
    1. Yes, you’re reading that right.
    2. Yes, but you need to consider gift tax consequences
    3. I don’t know what “pay for a long” is. Do you mean “loan”? As in “student loan”?
    4. If so, payments on a student loan are not an eligible expenditure from a 529 account.
    On a related note, GA is one of the few states that allows 529 contributions to be deducted if made up to the due date of your tax return (typically 4/15, this year 5/17), as opposed to most states’ deadline of 12/31.
    Oops, I meant taking the money out to pay for my own student loan (if there is money left over). Not sure if it was a typo or autocorrect that changed that to long.

    Regarding using the money to pay for my own MBA/MPH school, if I add myself as a beneficiary and do this, what would be the tax implications? You mentioned a gift tax. I would have to pay a gift tax on the money that I use for my own education?

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  • jfoxcpacfp
    replied
    Originally posted by southerndoc View Post
    I'm confused by this as well. If you have two kids, each with their own 529, does that mean that a married couple can deduct $16,000 per year from taxes ($8,000 per beneficiary)? Am I reading that right?

    If the 529 has enough money in it to pay for college for my children, can I add myself as a beneficiary and use the money to attend MBA or MPH school? Can I take $10k out to pay for a long? What are the tax implications of that?
    1. Yes, you’re reading that right.
    2. Yes, but you need to consider gift tax consequences
    3. I don’t know what “pay for a long” is. Do you mean “loan”? As in “student loan”?
    4. If so, payments on a student loan are not an eligible expenditure from a 529 account.
    On a related note, GA is one of the few states that allows 529 contributions to be deducted if made up to the due date of your tax return (typically 4/15, this year 5/17), as opposed to most states’ deadline of 12/31.

    Leave a comment:


  • southerndoc
    replied
    I'm confused by this as well. If you have two kids, each with their own 529, does that mean that a married couple can deduct $16,000 per year from taxes ($8,000 per beneficiary)? Am I reading that right?

    If the 529 has enough money in it to pay for college for my children, can I add myself as a beneficiary and use the money to attend MBA or MPH school? Can I take $10k out to pay for a long? What are the tax implications of that?

    Leave a comment:


  • jfoxcpacfp
    replied
    The owner is different from the beneficiary of a 529 account. Changing a beneficiary is considered a completed gift for which a gift tax return must be filed if > $15k/year/beneficiary (including other 529 contributions for said beneficiary, of course. Just consider the whole plan - you don’t want to overcontribute for the child but this could possibly be used with the understanding that unused contributions can be carried forward for 5 years.

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  • DrugHoliday
    started a topic Georgia 529 tax question

    Georgia 529 tax question

    I'm pretty sure I know what the answer is, but hoping that maybe I'm reading this wrong (unlikely)

    Georgia 529 site says contributions are "deductible up to $8,000 per year per Beneficiary for joint filers, and $4,000 per year per Beneficiary for all others."

    I know that beneficiaries can have more than one 529 account so long as they are owned by different individuals (eg, each of our 4 kids has an account that list me as the account owner, can open up accounts having my wife listed as owner). Kids are/will be going to parochial school, which I know is an approved educational expense now. In an effort to maximize tax advantages, is there any way to read the statute https://www.legis.ga.gov/legislation/54864, such that we would get to deduct the $8k on each account rather just each kid, so that I can get a break on the tuition I'm going to pay regardless and put money away for secondary education? Before we had 4 kids, didn't necessarily seem worth the effort, but if I can double this up, it's worth a little over $3600 back to me.

    Unrelated, but it's dawning on me that I should open accounts for myself and my wife at this point too.
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