Winners and Losers in the Tax Bill

[Gavin]

Yes, that is in the house bill. 529's for the inutero.

[Basfis]

I’ve been advised to look at Roth and whole life insurance vs the 529 to avoid fund appearing as “available” for education expenses. Assuming of course grants or loans are sought. No idea how/if it impacts scholarships. 

Anyone heard similar advice?

[moguy1973]

10 hours ago, Basfis said:

I’ve been advised to look at Roth and whole life insurance vs the 529 to avoid fund appearing as “available” for education expenses. Assuming of course grants or loans are sought. No idea how/if it impacts scholarships. 

Anyone heard similar advice?

Scholarships are included in exceptions.  If you withdraw without one of the exceptions you must pay a penalty and are taxed on the earnings the 529 has accumulated, but not on the principle.

The earnings portion of a nonqualified withdrawal is taxable as ordinary income. In addition, a 10 percent penalty tax must be computed on the earnings portion and paid with your federal tax return, unless you qualify for an exception to the penalty. The exceptions relate to withdrawals made on account of the beneficiary's death, disability, receipt of a scholarship, or attendance at a Unites States military academy. A limited exception also exists for families claiming a Hope credit or Lifetime Learning credit since those credits act to reduce your qualified higher education expenses.

[Phil Lilley]

I like this discussion.

I'm with @fishinwrench.  I like his attitude.  I am content with what I have- no complaints.  

Under the tax plan, I think both plans, our personal taxes are less, not by much.  And the resort will enjoy a tax break if we have any profit to claim.  We're spending a lot of money on big items this fiscal year but most of it is capital.  A few years ago, they let us claim all capital expense, not make us depreciate it out... that was nice!

[Gavin]

You could fund qualified education expenses with a Roth, but the annual contribution limits are lower than the 529 limits and no state tax break. Plus grandma & grandpa can contribute to the kid's 529 plans too.  

I'm not a fan of whole life insurance (lots of hidden fees), but if you do have it you could take out a loan against the policy.

The trade off is the increase in the standard deduction v your loss of exemptions. I you are not itemizing now, you will probably pay a little less but not much less.

[Old plug]

23 hours ago, Phil Lilley said:

I like this discussion.

I'm with @fishinwrench.  I like his attitude.  I am content with what I have- no complaints.  

Under the tax plan, I think both plans, our personal taxes are less, not by much.  And the resort will enjoy a tax break if we have any profit to claim.  We're spending a lot of money on big items this fiscal year but most of it is capital.  A few years ago, they let us claim all capital expense, not make us depreciate it out... that was nice!

Of course your not  going to have any profit. That is what bussiness is all qbout just deduct everything under in sun as bussiness expenses. The little guy that orks for you is not going to be able to do that. The rich wll get richer and the poor get poorer. We have been involved in a class struggle in this country back and forth for a very long time. 

[Phil Lilley]

If I want to build up cash for a big future project, how do I do that without showing a profit and paying corporate tax?

Last year I paid taxes on $xx,xxx so I could put it back to build new units. I’ve asked several accountants and no one can tell me how not to pay that tax, which I’m not complaining...  just the price of being profitable. 

My employees are not poor. And they aren’t little. 

[Phil Lilley]

Gavin. I will look into the 529 plan. I have 7 grandkids!  Thanks

[ness]

21 minutes ago, Old plug said:

Of course your not  going to have any profit. That is what bussiness is all qbout just deduct everything under in sun as bussiness expenses. The little guy that orks for you is not going to be able to do that. The rich wll get richer and the poor get poorer. We have been involved in a class struggle in this country back and forth for a very long time. 

That was a cheap shot. 

[Mitch f]

I believe like Michelle Bachman once said. Every person should pay income tax regardless of their situation. It is destroying the human character to pay nothing. 47% of the people in the US pay nothing. Not good.