![]() savings bonds, interest deduction for education loans, education credits, and Coverdell education savings accounts (ESAs)). QTPs are available to high- income taxpayers who are ineligible for many of the other education tax incentives (e.g., the tax- free redemption of U.S. ![]() Note: There are no adjusted gross income- based phaseout rules for making contributions to QTPs. Without the election, made by checking the requisite box on Schedule A of Form 709, United States Gift (and Generation-Skipping Transfer) Tax Return, the contributions to a QTP are considered current- year taxable gifts ( Estate of Beyer, T.C. Thus, gift tax returns may need to be filed, depending on the amount of the QTP contributions. If a contribution exceeds the annual gift tax exclusion, the contributor can elect to spread the contribution over a five- year period (Sec. (Many states allow residents to claim a state income tax deduction for a limited amount of contributions made to the state QTP.) Contributions to a QTP for the benefit of someone other than the contributor are treated as taxable gifts, eligible for the annual gift tax exclusion. ![]() There are no federal income tax consequences to either the contributor to a QTP or the designated beneficiary when contributions are made and while funds remain in the account. QTPs include both prepaid tuition programs and savings programs. Once established, these accounts qualify for favorable federal (and often state) tax benefits. Although the details of these plans can vary widely, they all allow parents and grandparents to set up college accounts for children and grandchildren before they reach college age. 529 to codify the significant federal tax breaks delivered by qualified tuition plans (QTPs).
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