More uses for Coverdell

Paying for a child’s college education is often a stressful ordeal for parents, which is why there are plans such as the Coverdell Education Savings Account (CESA) and Section 529 that assist with payment. Unfortunately for parents using the CESA, this method is not the best way to save up, as it has a much lower contribution limit than the Section 529 plan. The money contributed to this account can hardly be considered useless though, as there are multiple alternatives that can be used to capitalize on these tax-free distributions

Though a 529 is better for college savings, a CESA can help pay for private schooling.

The CESA, under current law, allows for parents or grandparents to contribute up to $2,000 annually per child or grandchild. After the contributions are made, the account can grow on a tax-deferred basis and money can be withdrawn, tax-free, to pay for school related expenses. … Read More

Saving on business meals

Under the recently enacted Tax Cuts and Jobs Act (TCJA), there has been a crackdown on which meal and entertainment expenses are tax deductible. Under the previous law, 50% of all business-related meal and entertainment expenses were tax deductible at the end of the year, but the TCJA has cut this discount down to solely meal related expenses. This change initially caused confusion, but a recent notice sent out by the IRS was able to make light of the new rules. In order to make to proper deductions and fully utilize the law for your business, it is important to understand the rules of what can be deducted and how to record it.

Under the TCJA meal expenses are still 50% tax deductible

The most important part of getting the full deduction for your business is making sure to obtain receipts that denote separate charges for food bought in connection with … Read More

Back-Door Roth

Saving for retirement can be a concern for anyone, especially as the traditional means, such as pension programs have been starting to disappear from many companies. One of the most common alternatives to the old system is contributions to an Individual Retirement Account, or IRA for short. There are multiple different types of retirement accounts, with the main difference being whether contributions or distributions are taxed. The Roth IRA is often seen as the preferred savings method, as it allows for tax-free distributions once you retire, but it can also be limited by current tax law. This is where it becomes important to understand the back-door method for contributing to a Roth IRA.

Investing in the right plan now can yield greater benefits in the future.

The two main barriers in contributing to a Roth IRA are the maximum contribution and maximum income figures. In 2018, a maximum of $5,500 could … Read More