You could deposit the money and withdraw it later in the year if needed. Depending on your state, you may get an income tax deduction or credit for contributions to a 529 plan. It can be a great short-term savings strategy if your child is going to private school anyway.It can be easier to request direct gift contributions for 529 plans than for other types of investment accounts. 529 plans have gifting options, websites and other resources for asking friends and family members to contribute to your student’s education. You have a variety of gifting options for K-12 tuition.You can save more in a 529 plan account on an annual basis than a Coverdell Savings Account, for instance, which also can be used for qualified education expenses at all levels of education.
Your education savings account is versatile and virtually limitless.No matter what state you live in, you won’t pay taxes on growth from earnings on your investments and savings if you use the money for qualified education expenses. Pros and Cons Pros of Using 529 Plans for K-12 Tuition You also could end up with state taxes as a recapture for state tax deductions on contributions. You would likely incur a tax penalty and federal income tax for any amount withdrawn for K-12 textbooks or other expenses beyond tuition. On the state level, your state may give you an income tax deduction or a credit on contributions. On the federal level, your account grows tax-free. There are no differences in what is required to contribute to 529 plans for K-12 or college costs.
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