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Posts Tagged ‘deductions for child education costs’

No matter how young your child may be, now is the time to start saving for their education.  Here are a few excellent ways to start saving now.

One of the best ways to save money when it is time to withdraw funds for your child’s education is with a Coverdell Education Savings Account.  You can contribute up to $2000 annually until your child reaches eighteen years of age.  The deposits are not pre-tax, but the funds are not taxable upon withdrawal as long as they are used for education.

529 College Savings Plans are among the most popular educational savings programs.  There are two different types of 529 plans available.  The 529 College Savings Plan allows you different options for investing and your investment returns are not taxed as long as the money is used for education expenses.  The second 529 plan is the 529 Prepaid Tuition Plan.  It works sort of like prepaid fuel oil purchases.  You pay tuition based on the current cost and the plan allows you to hold that cost until your child begins attending college.
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