My brother is in college and my sister is attending a private high school. I would like to help my parents pay for their education. Is there any way to do this that would be tax-deductible?
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You can contribute to a 529 plan for the benefit of your siblings.
(source)
Even better: Show them how to work around the system. (Not my website; not an affiliate link.)
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1+1 for low cost college link. University charges have become much too high over the last two decades. – mgkrebbs Jun 30 '11 at 5:55
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1I'll give it +1 for the guide. The guide has a lot of useful tricks -- even if you go the mostly conventional route but use one of the tactics to "quiz out" of a year of school, you've still saved $10-30K. It would be even better if it weren't written in the conspiracy nut tone. And this link would have been better written as a comment, since it is not really an answer to the question as asked. – bstpierre Jun 30 '11 at 12:15
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1I'll give it -1 for the incorrect answer. Contributions to a 529 are not tax deductible, which is what the OP was asking about. – bstpierre Jun 30 '11 at 12:16
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1Hmmm. I didn't read much of the guide, but I dug around on the site and he's got some fairly unusual opinions about how colleges offer courses. I only want to post a caution about using his advice, and nothing more than a cuation, as we are already heading down a threadjack. Caveat emptor. – gef05 Jun 30 '11 at 15:25
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2@bstpierre With 529s, there may be a tax deduction for state income taxes. See finaid.org/savings/state529deductions.phtml – Chris W. Rea Jun 30 '11 at 15:52
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The answer is closer to a "no." The breaks are geared toward allowing a tax deduction for interest on student loans, not a deduction for the education cost itself. @mbhunter's answer is great for the parents saving for a college education in the future, the growth in a 529 is tax free when used for higher education.
@tghw - you are kind to want to help. But it won't reduce your tax burden.
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With 529s, there may be a tax deduction for state income taxes. See finaid.org/savings/state529deductions.phtml – Chris W. Rea Jun 30 '11 at 15:53
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OP is in NY. There's a state deduction for 529, limit of $5000/single, but he might be able to benefit. – JoeTaxpayer♦ Jun 30 '11 at 16:16
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My NY relatives do exactly this. They see it as a good way to stick it to one of the highest-taxed states in the country. – mbhunter Jun 30 '11 at 16:52
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mbh - this is the one point that can make a 529 useful for the quick in/out, I'm unaware of other reasons to do so. – JoeTaxpayer♦ Jun 30 '11 at 19:59
