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This Web site contains a compilation of more than a thousand consumer finance  columns written by Tony Novak from the 1980s through 2006, updated and reformatted for maximum usefulness today.  New material was added after 2010.

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Paying for college

originally posted: 11/22/2006  reposted: 2/18/2011 This post has not been recently reviewed or revised by the author and may be out of date. If you notice an error or are in doubt, please send a new question by email or ask for an update. Email

Q: I own my own business, make more than 200,000, have investments over 500,000. I have a CFP, CPA, an attorney and a stock broker. But no one has been able to tell me what is the best way to pay for my children's college costs. What is the best way to minimize the expense?

A: There are four strategies that may be effective in your situation: 1) Shift income to the child. Probably the most effective way is to hire your child as a part-time employee and pay them well, but within reason. Keep in mind that when income is reported on a tax return, the child may qualify for an education tax credit in the future even if the parents do not. This is important for wealthy families and students who pay most of their own support costs and are not the tax dependent of the parent. 2) Gift appreciated assets (like stocks) to escape taxes. 3) Use a Section 127 tuition reimbursement plan for up to $5,250 on a tax-free basis. The child must be age 21 or older to qualify for this benefit. 4) Negotiate tuition discounts from private universities. It is very reasonable to expect that most private colleges will offer a tuition discout to students who do not qualify for financial aid if pressed on this issue. OnlineAdviser can help develop and execute the plan that will minimize the taxes for each unique family situation.


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