In the past, I've advised client's to gift shares of stock to children in college to fund their education. When the child would sell the stock, the child would be taxed at a lower rate than the parent would be.
Unfortunately, that strategy has been taken away. Congress has passed an expansion of the kiddie tax, income taxed at the parent's marginal tax rate.
Even though that strategy has been eliminated, I believe it's still a good idea to use capital assets to fund college education (note assuming you do not have 529 plans in place).
The tax rate on capital assets is still a top rate of 15% v. 25-25% for ordinary income.
It still may be a good idea to gift assets to the children since most states have no "kiddie tax".
Again, your college savings plans still provide for a great savings vehicle but should be placed in the context of overall financial plan.
Subscribe to:
Post Comments (Atom)
No comments:
Post a Comment