Hobie, thanks for the tip, I did not know that once they are 18 they gain control. With bonds, I had physical control as they were in my safe deposit box. But after getting hosed on having to pay income tax on the profits due to tax free “phase out at certain income levels” I chose to go 529 with the grandkids. A lot of people don’t realize that college is not deductible at certain income levels. For so cal that bar gets reached at middle class levels. Every year I paid tuition for kids and I threw away 9 different 1099-T’s because I got no deductions for them. Higher education tax deductions phase out completely a 80k single and 160k married.
from the IRS website:
“Education savings bond program. For 2018, the amount of your education savings bond interest exclusion is gradually reduced (phased out) if your MAGI is between $79,550 and $94,550 ($119,300 and $149,300 if you file a joint return). You can’t exclude any of the interest if your MAGI is $94,550 or more ($149,300 or more if you file a joint return). See chapter 10.”
So 94k single or 149k married and you get taxed on that college savings plan. In some parts of the country that could be defined as rich people, but not in so cal.
529 for it’s faults is the only way to go at income levels above those.But when you are in your 20’s, have a kid and star saving for college you can’t predict your future income.
