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Tax Benefits.
What are the tax advantages?
Does this plan disqualify us from taking the HOPE scholarship or the Lifetime Learning Credit?
Where can I find more tax information on 529 college savings plans and other educational savings vehicles?
What are the tax advantages?
There are several tax benefits that make the College Savings Plan of Nebraska a very smart way to save for college.
- Account Owners may deduct up to $5,000 in plan contributions from their federal adjusted gross income each year on their Nebraska tax return ($2,500 if married filing separately). To be eligible for the 2008 tax-year deduction, contributions must be postmarked by December 31, 2008.
- Earnings grow tax-deferred (which means your investment will accumulate faster because you are not paying taxes on it every year)
- "Withdrawals for qualified expenses are federally TAX-FREE and Nebraska State income tax-free.
Does this plan disqualify us from taking the HOPE
scholarship or the Lifetime Learning Credit?
No. The student or the student's parents may claim a Hope Scholarship
Credit or Lifetime Learning Credit for qualified tuition and related expenses
covered by this plan, provided the other eligibility requirements for
the credits are met.
Where can I find more tax information on 529 college savings plans and other educational savings vehicles?
The federal government has a good publication that discusses the various educational savings vehicles and tax credits and deductions. IRS Publication 970 can be viewed or downloaded from the IRS Web site. Your tax or legal advisor is also a good resource.
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