Under the Tax Cuts and Jobs Act, money withdrawn from a 529 Plan in an amount up to $10,000.00 and paid towards a child’s annual tuition expenses at a private or religious elementary or secondary public school are excluded from gross income.  This only applies to tuition.  This also only applies at the federal level.

California currently does not conform to the new federal laws with respect to 529 plans.  This means that if you withdraw money from a 529 plan for tuition as specified hereinabove, you will have to recognize income, pay taxes, and you will incur a 2.5% early withdrawal penalty.

If you are thinking about taking advantage of the new federal tax laws pertaining to 529 plans, but you have concerns about the amount of tax and penalties you will incur as a California taxpayer, it is important to meet with a tax attorney who can advise you, listen to your concerns, and provide you some guidance.

Mendes Weed, LLP is experienced in providing tax consulting services to taxpayers with respect to both Federal and California taxes.  It is definitely worth the additional time and expense to meet with a tax lawyer who can assess your situation and discuss the benefits and risks of taking certain actions.

Mendes Weed, LLP is here to help you if you have any questions.  (925) 390-3222.

 

The tips and materials provided on this page are for informational purposes only, offered as public service. No information on this website should be considered legal advice or used as a substitute for legal advice. For legal advice, you should contact an attorney directly.

Christina Weed  CBLS Tax Law

 

PHONE: 925.390.3222

FAX: 925.301.8667

 

Mendes Weed, LLP offices are located in Walnut Creek and our skilled attorneys provide family, tax, business and trust law assistance for clients. For your convenience, we also have attorneys' offices in San Francisco and Sacramento by appointment only.

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