• Print
  • Default text size A
  • Larger text size A
  • Largest text size A

Links provided by Fidelity Brokerage Services

fidelity-fbs-iconThese links are provided by Fidelity Brokerage Services LLC ("FBS") for educational and informational purposes only. FBS is responsible for the information contained in the links. FICS and FBS are seperate but affiliated companies and FICS is not involved in the preparation or selection of these links, nor does it explicitly or implicitly endorse or approve information contained in the links.

Published by Fidelity Interactive Content Services

Content for this page, unless otherwise indicated with a Fidelity pyramid logo, is published or selected by Fidelity Interactive Content Services LLC ("FICS"), a Fidelity company with main offices in New York, New York. All Web pages that are published by FICS will contain this legend. FICS was established to present users with objective news, information, data and guidance on personal finance topics drawn from a diverse collection of sources including affiliated and non-affiliated financial services publications and FICS-created content. Content selected and published by FICS drawn from affiliated Fidelity companies is labeled as such. FICS selected content is not intended to provide tax, legal, insurance or investment advice and should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security by any Fidelity entity or any third-party. Quotes are delayed unless otherwise noted. FICS is owned by FMR LLC and is an affiliate of Fidelity Brokerage Services LLC. Terms of use for Third-Party Content and Research.

Tax benefits for education of grandkids

  • By Judy O'Connor,
  • Bankrate.com
  • – 01/30/2014
  • 529 Plan
  • Facebook.
  • Twitter.
  • LinkedIn.
  • Google Plus
Please enter a valid e-mail address
Please enter a valid e-mail address
Important legal information about the e-mail you will be sending. By using this service, you agree to input your real e-mail address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an e-mail. All information you provide will be used by Fidelity solely for the purpose of sending the e-mail on your behalf.The subject line of the e-mail you send will be "Fidelity.com: "

Your e-mail has been sent.

Q: How can I deduct the cost of college for my grandkids? I have been helping them out, but never deducted any of it. I think we might help more people if we could at least get a deduction for it. Are there any tax benefits for education?

A: Your grandchildren are fortunate to have you as a grandparent who wants to help them with college. The IRS has a lot of tax benefits for education in the form of either credits or deductions, but unfortunately, unless your grandchildren are your dependents, you will not be able use them on your tax return.

However, there is something that you can do that will help with taxes, and that is to put your money into a 529 college savings plan for your grandchildren. There are two types of plans: prepaid tuition plans and savings plans. Each state has its own plan, but you are not restricted to your state's 529 savings plan, so be sure to compare the various features of each plan.

The contributions to the plan are not deductible on your federal return, but are tax-deductible in many states. The earnings in the account are not subject to federal tax and generally aren't subject to state tax when used for qualified education expenses of the designated beneficiary, such as tuition, fees, books and room and board. Allowed expenses even include the purchase of any computer technology or equipment and related services such as Internet access.

If you contribute to a 529 plan, there may be gift tax consequences if your contributions, plus any other gifts, to a particular beneficiary exceed $14,000 each year. If that is the case, there is a special rule that applies to contributions to 529 plans and the details for it are included in the instructions for Form 709 United States Gift Tax Return.

IRS Publication 970, Tax Benefits for Education is a good resource for taxpayers to guide them through the various tax benefits when paying for college or other postsecondary educational expenses.

  • Facebook.
  • Twitter.
  • LinkedIn.
  • Google Plus
Please enter a valid e-mail address
Please enter a valid e-mail address
Important legal information about the e-mail you will be sending. By using this service, you agree to input your real e-mail address and only send it to people you know. It is a violation of law in some jurisdictions to falsely identify yourself in an e-mail. All information you provide will be used by Fidelity solely for the purpose of sending the e-mail on your behalf.The subject line of the e-mail you send will be "Fidelity.com: "

Your e-mail has been sent.
© Copyright 2014 Bankrate, Inc. All rights reserved.
Votes are submitted voluntarily by individuals and reflect their own opinion of the article's helpfulness. A percentage value for helpfulness will display once a sufficient number of votes have been submitted.
Content for this page, unless otherwise indicated with a Fidelity pyramid logo, is published or selected by Fidelity Interactive Content Services LLC ("FICS"), a Fidelity company with main offices in New York, New York. All Web pages that are published by FICS will contain this legend. FICS was established to present users with objective news, information, data and guidance on personal finance topics drawn from a diverse collection of sources including affiliated and non-affiliated financial services publications and FICS-created content. Content selected and published by FICS drawn from affiliated Fidelity companies is labeled as such. FICS selected content is not intended to provide tax, legal, insurance or investment advice and should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security by any Fidelity entity or any third-party. Quotes are delayed unless otherwise noted. FICS is owned by FMR LLC and is an affiliate of Fidelity Brokerage Services LLC. Terms of use for Third-Party Content and Research.
fidelity-fbs-iconThese links are provided by Fidelity Brokerage Services LLC ("FBS") for educational and informational purposes only. FBS is responsible for the information contained in the links. FICS and FBS are seperate but affiliated companies and FICS is not involved in the preparation or selection of these links, nor does it explicitly or implicitly endorse or approve information contained in the links.

Before investing, consider the funds' investment objectives, risks, charges, and expenses. Contact Fidelity for a prospectus or, if available, a summary prospectus containing this information.  Read it carefully.