Expect to be paying elementary or secondary school costs in the future?
Consider an ESA
As the school year draws to a close, it’s a good time to think about Coverdell Education Savings Accounts (ESAs) — especially if you have young children.
One major advantage of ESAs over another popular education saving tool, the Section 529 plan, is that tax-free ESA distributions aren’t limited to college expenses; they also can fund elementary and secondary school costs. That means you can use ESA funds to pay for such qualified expenses as tutoring and private school tuition.
Here are some other key ESA benefits:
- Although contributions aren’t deductible, plan assets can grow tax-deferred.
- You remain in control of the account — even after the child is of legal age.
- You can make rollovers to another qualifying family member.
The annual contribution limit is $2,000 per beneficiary. However, the ability to contribute is phased out based on income.
Would you like more information about ESAs or other tax-advantaged ways to fund your child’s — or grandchild’s — education expenses? Contact Jim Komos at 216-831-7171 or jkomos@cp-advisors.com for assistance.
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Before donating a vehicle, find out the charity’s intent.
If you donate your vehicle, the value of your deduction can vary greatly depending on what the charity does with it. You can deduct the vehicle’s fair market value (FMV) if the charity:
- Uses the vehicle for a significant charitable purpose (such as delivering meals-on-wheels to the elderly),
- sells the vehicle for substantially less than FMV in furtherance of a charitable purpose (such as a sale to a low-income person needing transportation), or
- makes “material improvements” to the vehicle.
But in most other circumstances, if the charity sells the vehicle, your deduction is limited to the amount of the sales proceeds.
You also must obtain proper substantiation from the charity, including a written acknowledgment that:
- Certifies whether the charity sold the vehicle or retained it for use for a charitable purpose,
- includes your name and tax identification number and the vehicle identification number, and
- reports, if applicable, details concerning the sale of the vehicle within 30 days of the sale.
For more information on these and other rules that apply to vehicle donation deductions, please contact the tax experts at Ciuni & Panichi, Inc. – Jim Komos at 216-831-7171 or jkomos@cp-advisors.com for assistance.
© 2015