What is a certified tax coach? “We help our clients keep more of what they make by lowering their tax liability through legal means,” describes our guest Craig Cody. He is a best selling author and certified tax coach that works in all 50 states with his average client saving over $20,000 a year in taxes. Filling out the forms properly is very different from planning your life to get the most back from completing those boxes. Listen to this short episode for all of the tax secrets you can’t miss!
Questions Answered Today:
Are there tax benefits for paying for college?
Yes! Some of the top ones include:
- Lifetime Learning credit
- New Opportunity credit
People with children in school sometimes make too much money and they miss out on these. They didn’t plan and these credits phase out.
Some simple planning to perhaps move more money towards retirement can lower you back into the threshold.
Most people that file on their own or typical tax accountants would just say, “Sorry, you don’t get the credit,” instead of working to find a way to get the credit.
Financial aid is based on your income and assets.
There are legal strategies to lower your income by writing off expenses, or maybe restructuring a business/changing your entity, that can be very beneficial to business owners.
That’s where Craig Cody comes in- his company is filled with experts to help you with your unique situation to figure out if the benefit is worth the effort.
Bottom line: It is complicated and you really need to work with someone that understands both the college side as well as the tax side.
Communication is the key!
Can I hire my child?
Be sure to consult with your advisor to be certain you are doing everything correctly!
You can legally hire your child as young as 7 years old (Craig recommends 11 years old) to work on rental properties and start paying them a reasonable compensation.
Everything has to be well documented with excellent records (including how much you are going to be paying your child supported with comparable invoices of what a fair market price is), but then the money can be transferred into their own account (again, with documentation) and they can pay for college from there.
As long as they are under 21, their income is not subject to self-employment tax.
If you aren’t going to claim them as a dependent, they can file their own tax return and then you are eligible for some of those education credits.
Education Assistance Plan: Where you pay your nondependent $5,250 a year which is tax free to the student, but tax deductible to the business.
What else should I know?
Check with your professional on what is available in your state.
It is never too late to start a 529 plan if you are going to have a child in college eventually. Most people just aren’t aware of who or how much they can put into it.
Cody also wrote “10 Most Expensive Tax Mistakes that Cost Business Owners Thousands” which includes:
- Failing to plan
- Choosing the wrong entity
- Missing family employment
- Missing medical benefit plans
- Home office
- Retirement plan
- Missing Craig’s help
Our listeners can have a FREE copy of this book! Check out the Links And Resources for yours!
LINKS AND RESOURCES:
- Podcast Episode Index of all our shows!
- Core Areas Article
- Scholarship Guide
- Free copy of “10 Most Expensive Tax Mistakes That Cost Business Owners Thousands”
- Craig’s Contact Info
- Email: firstname.lastname@example.org
- Website: http://www.craigcodyandcompany.com/college/
- Skype: CraigCody2742
- Twitter: Craigc2742
- Facebook: CraigCodyandCompany
Core Area- Scholarships
All families have to talk about scholarships, but not all will pursue or win them.
Beginning in the sophomore or junior year of high school, start figuring out how scholarships work and if you are going to pursue them.
There are two broad types of scholarships:
- Directly from the college you are attending
- EVERYONE should look at these and go for them!
- Private scholarships
- From outside companies or other sources, including local
Some families will not be very successful at winning these because their child is relatively average and participates with activities/sports at a basic level.
Other families could win quite a bit if their child is a great communicator, has strong grades, is very talented in an area/gifted, or deeply involved with something.
If your student is going to fill out 40 scholarship applications, first they have to find 40 they qualify for and then do all the application processes. It is a lot of work!
The most successful families have mom and dad as part of the process with regularly scheduled meetings where they help keep their child organized and focused.
You will have to figure out if this is worth your time. Time might be better spent getting a job and working to earn money and putting that towards college expenses instead.
Decide: a lot of scholarships, a handful we are very qualified for, or no scholarships at all.
Check out the scholarship guide in the links for great information!
Optional Area- Getting Involved in the Military
There are a few ways the military can be part of the college process including:
- ROTC (Reserve Officer Training Corp) while in college
- GI Bill
- For after the child has served or parents can possibly transfer theirs
- Military Academy
- If it is a right fit for you
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