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Lane
Lane, JD, CFP, MBA, CRPS
Category: Tax
Satisfied Customers: 10173
Experience:  Law Degree, specialization in Tax Law and Corporate Law, CFP and MBA, Providing Financial & Tax advice since 1986
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Our son and s family live in Vancouver, BC. We have

Customer Question

Our son and his family live in Vancouver, BC. We have established an educational fund for their son who will be entering Montessori preschool in January. How do we easily pay for his tuition through his educational fund managed in the US? Thank you kindly for your consideration in this matter. Sally
Submitted: 1 year ago.
Category: Tax
Expert:  Lane replied 1 year ago.

Hi,

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I hold J.D. (Duris Doctorate -a Doctoral degree in the law), MBA (Finance & Tax specialization), a BBA from Mercer University's Stetson School of Business & Economics, as well as CFP and CRPS (Chartered Retirement Plans Specialist) designations

I can help here

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I'm assuming that you live in the US as well? (can you please confirm)?

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There are essetially three types of funds COMMONLY used for educational pueposesw and they each carry different tax treatment; 529 plans, UTMA and Coverdell Education accounts.

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If you'd specify that you are US citizens and residents AND the typs of account I can give you a specific answer

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Thanks

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I'll be here

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Lane

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Customer: replied 1 year ago.
Thank you for your patience. Am waiting for specifics re: educational fund. My husband will be here shortly.
But, in the meantime, please tell me why I needed to give pertinent info for 2 Visa credit cards, both of which are not being accepted. I just used one of them about an hour ago and I know they are both valid. Thank you, again. Sally
Expert:  Lane replied 1 year ago.

Hi Sally,

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We experts here are just users (although with verified credentials) as you are.

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Anything having to do with pricing, subscriptions, payments, etc. has to be handles by customer service ... the TOS (Terms of Service contract) here doesn't allow us to talk about, or know about, those issues.

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I CAN tell you that will all of the relatively new fraud "protections" that banks use now CAN sometime cause something to be declined when something is deemed to be outside of your normal spending pattern ... b ut that's purs speculation.

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You can get customer service here: 1(###) ###-####/p>

and here:

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Customer: replied 1 year ago.
the educational fund is a Charles Schwab investment account that allows for use of any kind of educational pursuit. We made sure of this with our financial advisor as we wanted to help with preschool on.
Expert:  Lane replied 1 year ago.

Ok, that tells me where the account is held.

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But what I'd need to know to answer your question in any specific way is the ownership form of the account.

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Here are some possibilities:

  • UTMA/UGMA (Uniform Transfers/Gifts too minors) accounts
  • 529 educational plans
  • Coverdell Education accounts
  • Joint tennancy
  • individual ownership

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Each of these is taxed differently and have different requirements to receive the tax incentives associated

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For example a 529 Education Plan allows for tax deferred growth and then the ability to pull tax free if the dollars are used for qualified education expenses at qualified educational institutions

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UTMA and UTMA accounts can grow without taxation at all up to a certain limit ... The first $1,000 is tax-free, covered by the child's standard deduction. The next $1,000 is subject to the child's tax rate, which starts at only 10% for ordinary income, and 0% for long-term capital gains.

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For coverdells, Contributions to a Coverdell ESA are not deductible, but amounts deposited in the account grow tax free until distributed.

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So, again we really need to know the OWNERSHIP form to give an accurate answer here.

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