Highway Robbery?
In response to their empty coffers, state taxing authorities are actively targeting both in-state and out-of-state companies for income and sales tax compliance.

Revenue agencies are aggressively employing random audits and blanketing entire industries with business activity and nexus questionnaires. Thanks to improved data sharing capabilities, agencies are cooperating across multi-state areas, leaving no leaf unturned.

In an almost unbelievable case, New Jersey State Police, aided by state revenue agents, stopped trucks with out-of-state markings on the New Jersey Turnpike. Drivers were queried about the business activity of the company for whom they were delivering and, if it was deemed that the company was indeed conducting business in the state, the trucks were seized and held until a “jeopardy tax” was paid.

Tightening the Nexus Noose
But it’s not just aggressive tax auditors. There is also the very real threat of punishing tax legislation from state legislatures.

For example, Massachusetts has made the move to unitary filing, requiring companies to consolidate all of their business units or affiliated companies and report combined income in the state if any single unit conducts business there. By considering companies as a single entity, taxing authorities feel they can prevent businesses from shifting income into low- or no-tax states. Vermont, New York, West Virginia and Wisconsin also recently made the move, while other states are scrambling to institute new taxation schemes based on gross receipts.

To top it all off, states are tightening the noose on the definition of nexus — the legal term for a taxable presence in a jurisdiction.

Michigan’s two-prong business tax (both a business income and modified gross receipts tax) utilizes an extremely aggressive nexus standard. Companies are subject to the tax if they have a physical presence in the state for more than one day during the tax year or “actively solicit” sales in Michigan. The state has very broadly defined “solicitation” to include use of the Internet, mail or telephone; use of print, radio, television or other advertising; or by maintaining an Internet site over or through which sales transactions occur with residents.

A Mistaken Sense of Safety
The longstanding view is that only companies that maintain a physical presence in a state have nexus there. Many companies have mistakenly clung to protections afforded by Public Law 86272, a 1950s-era federal statute that prohibits states from taxing the income of an out-of-state business that is soliciting sales there.

Unfortunately, the law only applies to sales of tangible personal property and doesn’t apply to sales tax. Nor does it offer protection from the gross receipts tax used by states such as Ohio, Texas, Washington and Michigan in lieu of a corporate income tax.

Recent state supreme courts rulings have even held that catalog sales in another state can constitute economic nexus and trigger taxation. Ditto for companies who solicit out-of-state credit-card holders. Once nexus is established, a tax can be levied — typically based on the proportion of a company’s sales, property and personnel in the state.

Are You a Target?
State taxing authorities are increasingly aggressive in identifying potential taxpayers. Their tactics range from surprise visits to the more-common business activity or nexus questionnaire. Here, taxing authorities may cast a wide net, querying every registered business in a given industry.

Small and midsize businesses are typical targets, as authorities know that smaller businesses often don’t have a tax department (and can’t or don’t want to pay a professional to review all of the different states they do business in).

Depending on the state (Washington is particularly broad in its application of nexus), you could be considered to be doing business there (and subject to taxation) based on any number of seemingly innocent activities.

Even the wording on an employment agreement or contract could trigger taxes. The person your company considers to be in a support or marketing role could be deemed a “salesperson” in the eyes of the state, thus triggering nexus issues.

Much more common is the routine business activity questionnaire that winds up in your company mail and is ignored (or, worse, the wrong person within the company responds and provides inappropriate answers

Because You Need Answers
Business owners are well advised to seek competent tax and accounting counsel before responding to a state’s request for nexus or business activity information — even if they feel they have no tax liability in that state.

Our experienced accounting professionals can provide invaluable guidance and help formulate an appropriate response to state revenue authorities. This typically includes a thorough risk analysis, including a pro-forma calculation of potential tax exposure.

In addition, we can advise you on planning techniques that can help avoid or mitigate sales tax issues.

Through our membership in PKF North America, we are in touch with CPA firms across the country to stay abreast of emerging issues in other states so we can advise our clients.

If you would like additional information or if you would like to discuss this in more detail, please contact us today.

While business use of a cell phone may be a working condition fringe benefit, personal use of an employer-provided cell phone is a taxable fringe benefit. However, substantiating the difference between these two types of uses for cell phones has been criticized as overly burdensome. Shulman himself has indicated that the law is “poorly understood by taxpayers and difficult for the IRS to administer consistently.”

With the intention of eliminating uncertainty for businesses and individuals, the IRS announced earlier this year that it was considering several proposals to simplify the procedures for employers to substantiate employees’ business use of cell phones. In addition to requesting public comments on these proposals, the IRS also asked for comments as to whether a simplified method would be appropriate to calculate the fair market value of the employee’s personal use of an employer-provided cell phone. However, because the proposals could have potentially taxed 35 percent of an employee’s use of a work cell phone, these proposals met with great public disapproval.

Due to the public’s reaction, Commissioner Shulman has encouraged Congress to pass legislation to end the taxation of employees’ personal use of employer-provided cell phones. While several proposals have been introduced in both the House and Senate, no legislation has been finalized.

Health care reform
On January 19, voters in Massachusetts elected a Republican to fill the Senate seat held by the late Democratic senator Ted Kennedy. The new composition of the Senate is 59 Democrats and 41 Republicans. The election deprived Democrats of their 60-vote filibuster proof majority in the Senate.
Democrats were counting on 100 percent party unity in the Senate to pass a final health care bill. Even if every Democrat votes in favor of health care reform, the bill will be vulnerable to a GOP filibuster. The election has forced Democrats to rewrite their playbook for health care and other pending legislation. Democrats may try to persuade one Republican senator to vote in favor of health care reform but they are unlikely to win any GOP support. Equally unlikely is that the House will approve the Senate health care bill, thereby negating the need for another Senate vote. Many House Democrats believe the Senate bill falls short of comprehensive health care reform.
More likely, Democrats will attempt to move a smaller health care reform bill. It is unclear if a smaller bill will require individual and/or employer coverage and impose additional taxes for individuals/employers that fail to comply with the mandate. Democratic leaders have not given a timetable for moving a smaller bill.

Estate tax
As of January 1, 2010, the federal estate tax is abolished. In its place is a modified carryover basis regime. Under this rule, the income tax basis of property acquired from a decedent’s estate holding significant appreciated property generally must be carried over from the decedent under this repeal. Executors may partially increase the basis of property by up to $1.3 million ($3 million in the case of property passing to a surviving spouse). The House had approved a one-year extension of the federal estate tax in December but the Senate failed to vote on the bill before January 1, 2010. Many members of the Senate support a one-year extension but lawmakers are divided over whether to make the extension retroactive to January 1, 2010.

Jobs bill
The House approved a jobs bill in December but the bill has languished in the Senate. The continuing economic downturn and high unemployment has motivated many lawmakers to pass a more robust jobs bill. Support is strong in the Senate for extending some business tax incentives that expired at the end of 2009, such as bonus depreciation and enhanced small business expensing. The White House is also in favor of a new tax credit to reward employers that hire new workers. Details are sketchy but it could be modeled on the Work Opportunity Tax Credit.

Haiti relief
Shortly after the devastating earthquake in Haiti, Congress approved a special tax incentive to encourage Americans to help the island nation recover. Taxpayers can treat monetary contributions to Haiti earthquake relief made after January 11, 2010 and before March 1, 2010 as if they had been made on December 31, 2009. In other words, taxpayers can deduct these contributions on their 2009 returns. However, contributions cannot be deducted in both years.

We will keep you posted of developments in Congress. Please contact us if you have any questions about federal tax legislation.

Here is a great article by Forbes.com that explains the issue further,  U.S. Regulators Squeeze Banks On Future Tax Assets.

Separately, on October 22, House Ways and Means Committee Chair Charlie Rangel (D-NY) said that he was in the process of drafting language that would make the estate tax permanent. Rangel said that because of the focus on the health reform bill, it was unclear when the bill would come to the House floor. He did say, however, that he didn’t expect to unveil his estate tax proposal until after next week’s Democratic caucus meeting, at which time he would discuss his proposal with members.

We will keep you posted on further developments.

A word to the wise: if you can take advantage of any tax break on this list before 2009 closes, do so. At this point, you cannot -and should not– count on having any of them available in 2010.

Homebuyer tax credit. The first-time homebuyer tax credit expires sooner rather than later in 2009. That is, the credit expires November 30 – the credit provision requires that the residence be “purchased” by November 30, with “purchase” defined as taking place when title passes and the full purchase price is paid (that is, at the “closing”) and not earlier when the contract of sale is executed and a down payment is escrowed. The credit is equal to 10 percent of the purchase price of a principal residence, up to $8,000. It applies to homes purchased after December 31, 2008, and before December 1, 2009.

Itemized state and local sales tax deduction. The ability to deduct state and local sales taxes in lieu of state and local income taxes is available until December 31, 2009, when the itemized state and local sales tax deduction expires.

Higher education tuition deduction. The higher education tuition deduction, permitting taxpayers to take an above-the-line deduction for qualified tuition and related expenses, will expire this year. The maximum deductible amount is $4,000 for taxpayers with adjusted gross income not exceeding $65,000 ($130,000 for joint filers). Taxpayers whose income exceeds that limit but does not exceed $80,000 ($160,000 for joint filers) may deduct up to $2,000 in qualified expenses.

Additional standard deduction for real property taxes. If you claim the standard deduction and also have real estate taxes, you can take an increased deduction ($500 for individuals and $1,000 for married couples filing jointly) for your real estate taxes. This tax break is scheduled to expire at the end of 2009.

Teachers’ classroom expense deduction. The $250 above-the-line deduction for qualified classroom expenses will expire at the end of 2009. The deduction benefits teachers and other educators, from teachers’ aides to school principals, who used their own out-of-pocket money to purchase qualified classroom supplies, such as notebooks, scissors, paper, pens, markers and books. As an above-the-line deduction, the $250 tax break is available to non-itemizers as well.

Bonus depreciation. For businesses, bonus depreciation and enhanced “section 179 expensing,” both designed to – temporarily – encourage business to make capital investments, are set to expire at the end of 2009. Bonus depreciation can be claimed for both regular tax and alternative minimum tax (AMT) liability unless the taxpayer makes an election out.

Enhanced Code Sec. 179 expensing. Enhanced “section 179 expensing,” is set to expire at the end of 2009 in addition to bonus depreciation, as mentioned above. Qualified taxpayers may deduct up to $250,000 of the cost of machinery, equipment, vehicles, furniture, and other qualifying property placed in service during 2009. The $250,000 amount is reduced if the cost of all Code Sec. 179 property placed in service by the taxpayer during the tax year exceeds $800,000.

Research and development credit. The research and development, or R&D credit, is set to expire at the end of 2009. The credit is available for businesses that increase their research expenses. The credit is 14 percent of qualified research expenses that exceed 50 percent of the average qualified research expenses for the three preceding tax years.

COBRA subsidy. The COBRA premium assistance provided as part of the American Recovery and Reinvestment Act of 2009 (2009 Recovery Act) will not benefit individual involuntarily terminated from employment after December 31, 2009. The COBRA subsidy in only available to individuals involuntarily terminated from work between September 1, 2008 and December 31, 2009 The COBRA subsidy under the 2009 Recovery Act provides for individuals to pay only 35 percent of their COBRA premiums with employers paying the remaining 65 percent, for nine months.

Unemployment compensation. Although unemployment compensation is typically taxable income, the 2009 tax year provides a respite from taxability for up to $2,400 of unemployment income. However, the exclusion from taxable income for unemployment compensation is only available for 2009, and will expire at the end of the year unless Congress acts to extend this benefit.

Motor vehicle sales tax deduction. The deduction for sales tax paid on the purchase a new motor vehicle is available for vehicles purchased between February 17, 2009 and December 31, 2009. Taxpayers can deduct state and local sales and use taxes paid on the first $49,500 of the purchase price of the vehicle. The deduction can be taken whether or not the taxpayer itemizes deductions. However, if you deduct state and local general sales taxes as an itemized deduction, you cannot “double dip” and take the deduction for new car sales taxes.

AMT exemption amounts. For 2009, the AMT exemption amounts increased to $46,700 for individuals and $70,950 for married taxpayers filing jointly. However, these exemption amounts will decrease in 2010 to $33,750 for single taxpayers and $45,000 married taxpayers filing jointly.

Our office will continue to monitor the situation in Washington to be ready to advise you if any of the provisions set to expire at the end of 2009 are extended. With Congress busy with health care reform, the likelihood is that the fate of most if not all of the expiring provisions will remain uncertain for some time. In fact, some in Congress have been quietly discussing the possibility of not passing any extension until next year, and then making it retroactive to January 1. Stay tuned.

Health care reform

Health care reform is predicted to cost in the neighborhood of $1 trillion and lawmakers are looking for ways to pay for it. Some revenue will come from cost savings to Medicare and other federal government programs. Other revenues will be generated by new taxes.

The House Ways and Means Committee approved a gradual surtax on higher-income individuals. The Senate Finance Committee rejected that idea and instead is expected to impose a tax on high-cost health insurance plans. Many lawmakers in the House and Senate also support new limits on health flexible spending arrangements (FSAs) and health savings accounts (HSAs).

One proposal has broad support in both the House and the Senate: mandatory individual health insurance coverage. Individuals who are not covered by employer-provided insurance would be responsible for obtaining coverage on their own. The House is likely to create a public option, similar to Medicare. There is less support for a public option in the Senate. Uninsured individuals would be liable for an additional tax. However, lower income individuals and senior citizens would be exempt.

Health care reform will likely impose new requirements on employers. The House Ways and Means bill includes a new eight percent tax on employers that do not provide health insurance coverage to their employees.  Employer-provided insurance would also have to meet certain minimum requirements. To help small employers, the House Ways and Means bill would allow them to claim new tax credits.

At this time, it is almost impossible to predict what a final health care reform bill will look like or when a bill will pass Congress. House leaders are working on drafting a bill to present to the full House, possibly for a vote in early November. The pace is slower in the Senate. The Senate Finance Committee is expected to continue writing its health care reform bill into October. The full Senate may not vote on a health care reform bill until November or December. If you have any questions about the tax proposals in health care reform, please contact our office.

Estate tax

Effective January 1, 2010, the current federal estate tax is eliminated as the law is now written. Congress actually passed this law in 2001 but delayed abolishing the estate tax until 2010 because of budget calculations. However, this treatment only applies to 2010. After 2010, the estate tax returns and at higher rates than in 2009.

The Obama administration has proposed extending the 2009 estate tax into 2010. This proposal would give Congress more time to make a permanent change. It would also give taxpayers some certainty in their estate planning. Many small business owners would like Congress to abolish the estate tax but this is very unlikely. Taxpayers should anticipate Congress retaining the estate tax; probably at rates similar to those effective for 2009.

Extenders

Every autumn, taxpayers and practitioners question if Congress will extend many popular but temporary tax incentives. Traditionally, Congress has extended them. In fact, they have been extended so many times that many taxpayers think they are permanent. They are not.

Some tax breaks scheduled to expire after 2009 are:

• Higher education tuition deduction;
• State and local sales tax deduction;
• Charitable contributions of IRA proceeds;
• Teachers’ classroom expense deduction; and the
• Research tax credit.

Congress could extend these provisions in December or wait until next year and make them retroactive to January 1, 2010. Our office will keep you posted on developments.

Business taxes

The Obama administration has proposed a package of international tax reforms. The proposals, among other things, would reform the business entity classification rules, defer some foreign-source deductions, and limit income shifting through intangible property transfers.  Neither the House nor the Senate has taken up the proposals and it is unclear if they will before year-end.

Also uncertain is a cut in the U.S. corporate tax rate. The U.S. corporate tax rate is the second highest in the industrial world. President Obama has indicated he would support a reduction in the corporate tax rate in exchange for closing unspecified tax loopholes.

Retirement savings

The White House and many members of Congress back new measures to enroll more workers in retirement plans. Several pending bills would require employers to offer retirement plans or enroll their employees in IRAs. Many lawmakers also support automatic enrollment in retirement plans. Employees would automatically be enrolled in a 401(k) or similar plan unless they opt out. These and other retirement-related bills have been referred to various House and Senate committees. They could come up for a vote before 2010.

More proposals

Also on Congress’ fall agenda are:

• Cap and trade legislation
• Fiscal Year 2010 IRS budget
• Energy tax incentives
• Education tax breaks
• Alternative minimum tax relief
• Tax simplification proposals
• Closing the tax gap
• Expanded information reporting

Please contact our office if you have any questions about pending legislation.

Individuals

One of the tried and tested year-end planning methods is income and expense shifting. Basically, you aim to smooth out taxable income between 2009 and 2010 by accelerating and postponing transactions that either produce income or yield deductible expenses. This technique works best if you can reasonably forecast your income and expense situation in the first few months of 2010.

One complicating factor this year is the recession. For many individuals, the end of 2009 is very different from the beginning of the year. Salaried workers and their spouses may have experienced a lay-off, furlough or reduction in hours at work. Self-employed individuals may be struggling with cash-flow problems. Many retired individuals are also having a hard time coping during the recession. Investment income is down and some retirees have re-entered the job market.

Fortunately, there are some provisions in the Tax Code that can help. For example, job hunting expenses may be deductible. The first $2,400 in unemployment benefits is tax-free. If you relocate to take a new job, moving expenses may also be deductible.

Besides employment, other life events have tax consequences. Marriage, divorce and children all impact your federal tax status. Some of the most overlooked tax incentives are targeted to children. If you paid someone to care for a child, spouse, or dependent, you may be able to reduce your tax by claiming the child and dependent care credit on your federal income tax return. This credit is separate from the child tax credit, which is $1,000 per qualifying child for 2009. There is also an adoption tax credit.  Many parents are using Coverdell Education Savings Accounts to put aside funds for a child’s schooling. Although the contributions are not tax-free, the distributions, if used for qualified education expenses, are tax-free. There is also an expanded education tax credit, the American Opportunity Tax Credit, which can help with college tuition costs.

For 2009, state and local sales taxes are also deductible (in lieu of state and local income taxes). This benefit may be especially valuable if you are planning a big-ticket purchase in the near future. Another popular tax incentive will expire before the end of 2009: the first-time homebuyer credit is set to expire after November 30, 2009. Several bills have been introduced in Congress to extend the credit another year. Our office will keep you posted on developments.

Wage-earners and pension recipients also need to plan for the Making Work Pay Credit. This payroll credit was enacted in early 2009. Employers and some pension plans are withholding less federal income tax. The impact of the Making Work Pay Credit varies significantly, depending on a taxpayer’s earned income, filing status and number of withholding allowances. The credit phases out for a single taxpayer who has modified adjusted gross income (AGI) between $75,000 and $95,000, and for married couples filing jointly whose modified AGI is between $150,000 and $190,000. Individuals with more than one job and married couples with two incomes may be surprised when they file their taxes in 2010 to discover that they are receiving a smaller refund or owe money.  If you have not yet adjusted your withholding for 2009, now is the time to act.

IRA conversions

A lot of folks are talking about IRA conversions. Starting in 2010, anyone can convert a traditional IRA to a Roth IRA regardless of their income and other current restrictions. You can choose to recognize income from the conversion in 2010 or average it out over 2011 and 2012. President Obama has proposed raising the top two individual marginal income tax rates after 2010. If you are considering an IRA conversion, you may want to do it next year and recognize the income in 2010. However, be cautious. The new IRA conversion rules are generous but not for everyone. Our office can help evaluate if an IRA conversion fits your savings strategy.

Small businesses

Small business expensing under Code Sec. 179 is at an all-time high this year ($250,000). The threshold for reducing the deduction is $800,000. The higher amounts are set to expire after 2009. Businesses that have been contemplating a purchase need to act soon if they want to take advantage of the more generous Code Sec. 179 expensing amount. The expensing amount will fall to $134,000 in 2010 unless Congress extends it.

Another business tax break – bonus depreciation – will also expire at the end of 2009. Fifty percent bonus depreciation is taken on top of the regular depreciation for the year the property is placed in service. Keep in mind that a larger current depreciation deduction results in smaller future deductions.

Many small business owners operate their businesses as sole proprietorships or partnerships. The expected increase in the top two marginal income tax rates after 2010 will also affect them. It is not too early to start planning for those anticipated rate hikes.

Small businesses should have a year-end retirement plan check-up. The Obama administration and the IRS recently announced some measures to encourage small businesses to offer a retirement plan or expand an existing plan. Our office can help you choose a retirement plan that is right for your small business.

Special considerations this year

Because of the recession, many individuals cannot meet their tax debts. The IRS is aware of how families are struggling and has promised to help. You may qualify for an installment agreement, which allows you to pay your taxes over time. The IRS might also accept an offer-in-compromise. Some individuals are uncomfortable by how the recession has impacted them. Don’t be. If you have unresolved debts with the IRS, let our office know now. We can work with the IRS on your behalf.

The same is true for small business owners. Frankly, the IRS is less sympathetic to business owners that fall behind in their tax obligations, especially payroll taxes, than with individuals. It may be tempting to skip a payroll tax deposit. This is a dangerous tactic and will result in severe penalties. Again, our office can help you work with the IRS.

As always, please contact our office if you have any questions about year-end tax planning. The earlier you get started, the better you can maximize your potential tax savings.

A recent article outlined President Obama’s initiatives to help people increase their savings:

• Make it easier for small businesses to automatically enroll workers in a 401(k) or IRA.
•  Gradually increasing automatic worker contributions over time.
• Allow taxpayers to check a box on their tax return to have their refunds sent to them as savings bonds.
• Make it possible for employees to put payments for unused vacation or sick days into their retirement plan.

Read the full article posted by Web CPA

American Opportunity Tax Credit

For 2009 and 2010, Congress has enhanced the Hope Scholarship Credit and has renamed it the American Opportunity Tax Credit. The 2009 Recovery Act makes the credit available to more families than the Hope Credit. Not only can the American Opportunity Tax Credit be used for the first two years of post-secondary education, but it is available for the third and fourth years of college as well. Further, the credit can be taken for more expenses, such as text books and course materials. And, although the credit phases out as adjusted gross income rises, the income phase out range has been increased. Additionally, 40 percent of the credit is refundable.

ABCs of the AOTC: The American Opportunity Tax Credit (AOTC) is available for 2009 and 2010 up to a maximum of $2,500 per eligible student per year (100 percent of the first $2,000 eligible expenses plus 25 percent of the next $2,000 eligible expenses). The credit phases-out at higher income levels, making the credit available to more families as well. For single taxpayers, the phase out range is increased to $80,000 – $90,000 AGI, and for married joint filers the credit phases out when AGI falls between $160,000 – $180,000.

You cannot claim the above-the-line higher education expense deduction (of up to $4,000) in the same year that you claim the AOTC or Lifetime Learning Credit; you must choose among these tax benefits. If you have a choice between the AOTC and the Lifetime Learning Credit, or the higher education expense deduction, you may find that the AOTC garners you more tax savings. Although the credit will usually result in more tax savings, you should calculate the effect of the AOTC, Lifetime Learning Credit and higher education expense deduction on the tax return to see which achieves the greatest tax savings. Remember, also, in “doing the math” that the tax benefits are based on calendar tax years and not school academic years.

Technology expenses and Section 529 Plans

New for 2009 (and 2010) parents and students can take tax-free withdrawals from their prepaid tuition plans (“529 plans”) to buy computers and computer-related equipment for college. The American Recovery and Reinvestment Act of 2009 (2009 Recovery Act) added computers, computer equipment, technology, internet access and “related services” to the list of qualified higher education expenses that can be paid for with tax-free 529 withdrawals. However, as with the AOTC, this expansion is temporary and applies only for 2009 and 2010 … unless Congress extends this new tax break.

Section 529 plan coverage. Qualified tuition programs, more commonly referred to as 529 plans, allow you to either prepay or contribute to an account set up for paying a student’s qualified education expenses at eligible educational institutions. When withdrawals are taken to pay for qualifying education expenses they are tax-free. Qualifying expenses include tuition, fees, books, supplies and equipment required for enrollment or attendance of the student at an eligible educational institution (and expenses related to special needs services for special needs students). They also include expenses for room and board as long as the student is enrolled in a degree or certificate program at least part time. Now, thanks to the 2009 Recovery Act, they also include expenses for computers and computer-related equipment and services.

The types of computer and related technology and equipment that can be purchased with tax-fee withdrawals are fairly expansive. Expenses include those made to buy: computers, computer software, peripheral equipment, fiber optic cables related to computer use, as well as internet access and related services. The computer and/or computer-related must be used by the student or family members during enrollment in college (or other post-secondary institution).

Exceptions. Tax-free withdrawals can not be taken for computer software designed for games, sports or hobbies, unless the software is “predominantly educational in nature.”

Additionally, while the tax law allows you to combine the tax benefits of a 529 plan with one of the education credits or deductions, you cannot “double dip.” That is, the expenses you use to compute the AOTC (or Lifetime Learning Credit) cannot also be included as a qualified higher education expense for purposes of determining your tax exclusion for 529 plan withdrawals.

Remember also that states have their own rules regarding education benefits, such as 529 plans and withdrawals. These must be considered as part of your education tax savings strategy.

Please contact us to discuss the higher education tax saving strategies that can best benefit your particular situation.