As we begin to prepare our daughter for college I can’t help but wonder how we could have better prepared ourselves financially. I currently sit with a tremendous amount of college debt and we don’t want that for her. I want her to go to college and celebrate what’s ahead of her and not dread what will be once she graduates. Thankfully for our daughter we’ve learned quite a bit about this through years of student loans but things are constantly changing making it hard for our youth to come out of college without any debt. To top it off parents are being forced to consider whether they want to save for their child’s college or their own retirement.
As my husband and I sat down to do our taxes this year we learned we could start saving for not only her college but the two little ones that haven’t entered the school stage yet. That it’s never too late to make a plan for our children. We began reviewing every single milestone and expense from the past year. My husband entering a graduate program. I left my full time job to start my own business. My husband started a new job. We had another baby. These were just a few of the things we had to consider.
Doing your taxes, or having someone else do your taxes, forces you to think about your personal finances. But did you know that your retirement plans, flex care accounts, child care expenses and even college savings programs can have an effect on the outcome of your taxes each year? We didn’t. We didn’t realize that investing in college savings plans could benefit us when it comes to filing.
If you haven’t taken advantage of these tax breaks in the past, you are essentially missing out on the potential savings. If you’re anything like us you want to take full advantage of every little thing. If we can claim it, we want to know about it. Don’t you wish there was a list of potential tax breaks in an infograph plastered all over the Internet?
Here’s something we wish we would have known about. If you have invested in a college savings plan through the Michigan Education Trust (MET), Michigan’s 529 prepaid tuition program, you are able to deduct the amount paid in 2016 on your state income tax return this year. If you purchased your contract as a lump sum, monthly purchase or payroll deduction, the entire contract amount contributed may be deducted. In addition to annual income tax savings, disbursements from MET for qualified higher education expenses are tax-free. Not a MET contract holder? If you purchase a contract this year, you will save on your 2017 state income taxes. Doesn’t this sound amazing?!
A few things to keep in mind as you begin to think about investing in Michigan Education Trust. This year’s enrollment period is open now through Sept. 30, 2017. If you’re strongly considering MET make sure you do it before May 1 when prices increase. For more information, visit SETwithMET.com.
Now that you have the information on Michigan Education Trust and what it can do for your income taxes. What are you going to do?
“Saving for college is a great example of a situation where you receive a tax break for something you should already be doing,” said Robin Lott, executive director of the Michigan Education Trust and the Michigan Education Savings Program.
