College tuition tax break loophole
By David Slade
The Post and Courier
Read more
Tax benefits for education IRS publication (PDF)
South Carolina's Future Scholar 529 College Savings Plan www.futurescholar.com
Who wouldn't want a 7 percent rebate on college tuition, room and board?
Using a loophole in South Carolina's Future Scholar 529 College Savings Plan, state residents can deposit money for as little time as it takes for a check to clear, then withdraw the funds and claim the entire amount as a state income tax deduction.
It's all legal, as long as the money is spent on higher education costs, but the state never intended for the plan to be used that way.
The state tax deduction was meant to encourage long-term investments for higher education expenses, but South Carolina's Future Scholar plan allows funds to be withdrawn immediately and without penalty.
For someone facing a $10,000 bill for tuition, or room and board, the tax break would mean a savings of $700. Over the course of four years of college, the tax break could be worth thousands of dollars.
The state's income tax rate is 7 percent, on all income over $11,100.
"You could call this one of the last true tax loopholes," said DeAnna Moss, tax manager at the financial advisory firm Dixon Hughes, in Charleston.
Read more in tomorrow's editions of The Post and Courier.
E-mail this story
Printer-friendly versionComments
Use the comment form below to begin a discussion about this content.
Notice about comments:Postandcourier.com is pleased to offer readers the enhanced ability to comment on stories. We expect our readers to engage in lively, yet civil discourse. Postandcourier.com does not edit user submitted statements and we cannot promise that readers will not occasionally find offensive or inaccurate comments posted in the comments area. Responsibility for the statements posted lies with the person submitting the comment, not postandcourier.com. If you find a comment that is objectionable, please click "report abuse" and we will review it for possible removal. Please be reminded, however, that in accordance with our Terms of Use and federal law, we are under no obligation to remove any third party comments posted on our website.
Users can now build user-to-user connections, follow friends' recent posts, add an avatar that fits their personality, and more. If you have posted here before you'll need to sign up again, or if you've never posted before, start now by signing up!
Full terms and conditions can be read here.
Thank you for your interest in this story. The comment thread for this article has been closed.
- Most Commented
- Most Emailed
