Nicolette Johnston, Nevada State Treasurer’s Office
April 11, 2016
Even though the IRS graced us with three extra days this year to file our income taxes, the deadline is nearly here. Perhaps you are celebrating now that it’s finally over—or maybe you filed months ago and your return is already a fading memory. Or perhaps you’ve waited until the last minute because you may owe Uncle Sam … yikes! But, hopefully you planned accordingly and received or will receive a decent return this year.
If you are receiving a return, are you someone who likes to ‘reward’ yourself and purchase the latest handbag or dream getaway? (Hey, you deserve it, right!) Or do you use it for a home improvement project, save it for a rainy day or put it in a Roth account for your retirement?
Now may be that time when you look into a different use for your tax return: a 529 College Savings Plan.
It’s never too early to begin saving for a loved one’s higher education because, before you know it, life catches up to you and you’re driving to Bed, Bath and Beyond for XL Twin sheets for freshman year dorm life.
If you don’t have children, you may still open an account for a special person in your life (or even yourself!). Grandparents: you may be especially interested in saving for grandchildren with 529s; imagine how much your children will appreciate you saving for their children. Many states offer matching grants to account holders who meet a certain income requirement, and while a parent may not qualify for that type of grant, often times a grandparent will.
The expenses for a child never seem to cease, and there never seems to be a good place to ‘start’ saving as a parent. There will always be daycare, dance or music lessons, field trips, prom, and so much more. So to get disciplined with a lump sum deposit (such as a tax return) and put into a 529 plan for your child’s (or grandchild’s) future is always a smart idea.
With the ever increasing rise of tuition rates, stashing money away for college today will help with the cost down the road—whether it be tuition, fees, books, room and board, or technology. Each dollar saved will be one less dollar of debt later. Think of it as purchasing a semester or two of books in advance!
If you already have a 529 account for your child, remember that you can contribute to it at any time, even if you set up an automatic payroll deduction or automatic withdraws from your bank account.
So, however you choose to spend (or invest) your tax return, consider applying a portion, if not all, to a 529 account. That designer handbag – as nice as it is – may eventually go out of style; the latest electronic gadget will be out of date next year; but a college education never goes out of style!
About the Author
Nicolette Johnston is the Public Information Officer for the Nevada State Treasurer’s Office. She is the former lifestyle blogger of Simply Colette and the winner of the HomeAway BlogAway Contest for the Royal Wedding. Nicolette is a proud college saver with a 529 plan for her 2-year-old daughter, Allison.