An Education IRA (EIRA) is an IRA established to provide funds that will allow a beneficiary to attend a program of higher education. There is no tax deduction allowed for the contribution, but all deposits and earnings may be withdrawn free of tax and penalties if used to pay for the costs of higher education. Beginning in 2002, EIRA proceeds may also be used free of tax and penalty to pay for the qualified expenses of a kindergarten through 12th grade education in public, private, and/or religious schools. EIRA contributions are limited to a maximum of $500 per year, but that's in addition to the $2K limit on any other IRA. Beginning in 2002, allowable EIRA contributions increase to $2,000 per year. For full details on contribution limits and distributions, For more info see The Education IRA."
You can contribute regardless of what you are putting into other IRA's or retirement plans. Grandma & Grandpa can contribute too, even if they DON'T have earned income. There is NO INCOME TAX on the earnings when you take it out as long as it's for educational expenses - including computers and room & board!
IRS Publication 970 - Tax Benefits for Higher Education
If you ever worked for a company or put money into a plan, but do not remember where it is, etc. try these ideas to locate your missing retirement funds.
Do I have to report proceeds from my X husband's wrongful death settlement on the FARFSA Application as AGI?
We are not sure - check with your CPA and Attorney - Here's our research on this
Death-settlement tax implications
Dear Tax Talk: I have a lawsuit related to the death of my husband. I should receive a large settlement. Will it be taxable? How much of it can I give to the children without paying tax? I know that at least 60 percent of the money is said to be for pain and suffering, but I'm not sure of the rest. Please answer as soon as you can as I have already started receiving some of the money. Thank you, Jeanette
Dear Jeanette: Generally, a recovery in a lawsuit for pain and suffering for the death of an individual is tax-free. You don't indicate what the remaining portion of the settlement relates to, so I can only tell you that if the amount is for punitive damages, it would be taxable. If the amount relates to lost wages it would be tax-free. Your attorney should be able to provide you better guidance on the tax implications.
If your children are not a party to the wrongful death action, then you would basically be making a gift to them. You can make a gift to each one of your children of up to $11,000 annually without gift tax implications. If you have three children, you can give $33,000 in 2002 and $33,000 in 2003. Source
Deduct the Cost of Your Child's Education?
Non-deductible child education expenses can't be transformed into deductible expenses by virtue of assigning assets or income to a trust, partnership, or other entity. Any investment scheme that claims to allow you to deduct these types of expenses should be considered highly suspect. Source IRS
Other taxable income (alimony received, business and farm income, capital gains, pensions, annuities, rents, unemployment compensation, Social Security, Railroad Retirement, and all other taxable income)
Here are some sample questions - taken from our brief survey on the net.
Include a description of your financial need
How do you plan to finance your college education?
What records do I need to fill out the financial aid form?
You or your parents can't get any financial aid because your family income is too high. False. Income is only one of the criteria on which financial aid is based. If the school's costs exceed your family's means, you may qualify for some form of financial aid (grants, work-study, or loans). Also some scholarships are based on merit.
Deduct the Cost of Your Child's Education?
