Taxes & Life Insurance May Help You Pay For College

It’s that time of year again. The tax man cometh, or at least they expect us to get our returns together and send them in or they will send us a nasty little letter saying we have to come visit their offices. This is the time of year some dread and others look forward to. It all depends on whether or not you expect to pay or get paid. If you are getting a return you can use the money to help pay for college.

Taxes can seem daunting but they are pretty simple. When you file your taxes you have two options, you can take the standard deduction that the IRS gives you for your filing status. This status will be single, married, married filing separately, or head of household. Each status has a different lump sum amount that the IRS allows you to have as your deduction against your earnings for the year. This amount deducted from your income becomes your AGI or Adjusted Gross Income. If you think you may have enough expenses that you can deduct you can itemize your deductions. People do this if they believe that their itemized deductions will be more than their standard deduction will come to.

Today there are great tax programs like TurboTax and TaxAct that will help you do your own tax filing. These software programs will even compare and contrast your deductions to determine which filing method is the better way for you to go.

One way to get a little extra added tax benefit is to get a variable life insurance policy. These types of life insurance policies cost a bit more in the way of your premium expense but they provide you access to cash that the policy accrues with no taxes attached. This money can be used as a way to your college savings because this money is not used in the financial aid calculation. Your AGI which was mentioned above is used in the financial formula to determine what level of financial assistance you are eligible for.

The nice thing is that you can pull this money from your variable life insurance policy once the “equity” has built up in it. The down side to this type of insurance is that it can be expensive and whatever you use from the cash gain will be deducted from the death benefit if you should die prior to paying it back.

This is a good way to save money towards your child’s college tuition if you are a parent of a newborn. If you have a child that is in pre-school or older this is probably not the best option for college funding. It takes quite a while for this money to build up. If you have children having life insurance is a good way to make sure that your family is covered in the tragic event that something happens to you. You also are looking at a pretty nice tax return because you can claim the costs from all those college expenses that your budding genius will run up while away the great institute of higher learning.
Taxes & Life Insurance May Help You Pay For College Taxes & Life Insurance May Help You Pay For College Reviewed by Admin on June 22, 2019 Rating: 5

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