WASHINGTON – The 529 College Savings Plans permit money saved to be used for tuition and textbooks, but not computers and US Senator Charles Schumer has signed onto the effort to have them added to the allowable purchases.
Schumer said in this day and age, it is critical for college students to have computers or notepads and he is supporting the effort to have them added to the list of items that may be bought.
“Under a 529, you can deduct money tax-free from your 529 account to pay for education related expenses like tuition, books, room and board, but you can’t deduct money to buy perhaps the largest education related expense outside of those items, a computer,” Schumer said.
In the Hudson Valley, there are over 92,000 of those 529 college savings plans.
The senator said if a family of four that makes $80,000 a year and falls within the 15 percent tax bracket after deductions, purchased a laptop, anti-virus software, computer charger, Microsoft Office and a backup hard drive for $1,200 for their child going to college, that family would face a $300 federal tax hit – their 15 percent federal tax rate, plus a 10 percent penalty, under current law if they used money from that 529 account on those purchases.
Under Schumer’s plan, the tax hit would be eliminated, saving the family $300.
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