<p>Oh, yes, it has. Many houses in my neighborhood (a standard-issue 60s neighborhood of 3- and 4-bedroom, 1-2 bath homes with standard-issue lots around a quarter-acre) had been selling for just above and just below $500K before the current downturn. I see very few with asking prices in the high $400s (and they aren’t selling), none in the $500s, and quite a few in the mid to upper $300s that would have had asking prices of at least $100K more not all that long ago.</p>
<p>Got a marketing flyer about a house nearby just last week that stated the bank wanted to realize $266K. If I had the money, I’d be awfully tempted to buy another house now!</p>
Is it too late to start 529 if you have the kid start college this fall?
How much you would gain, if you open account now?
Is there penalty if you move money out from 529 account, asume that you put too much money in the account? </p>
<p>Curiouse to know how well 529 account works in following scenarios:</p>
<ol>
<li><p>Family has not earn high income until recent year, besides they don’t know if the kid would go for college education at all. So they diddn’t start 529 account, but put money in their own accounts. Since the money put into the 529 is after the tax, with current market, will it gain much if you start as late as now?</p></li>
<li><p>Family put too much money in 529 account. say they prepared for a private but now kid chose a less cost school; or they planned for two kids, and now only one wants to go to the college. They have some left, will they able to move money out from the 529 without pay ‘extra’ penalty, like you would’ve withdraw money from retirement account befer 59?</p></li>
</ol>
<p>Since it all related to ‘tax’, a more ‘fair’ way of FA policy and tax related relief is, family paid portion of ‘tuition, fees, and books, etc.’ is eligible to ‘tax’ deduction no matter how you income braket is (ie. the deduction applied befor the MIT applied). Because this portion in ‘FA’ package is tax free to both ‘GIVE’ and ‘RECIEVE’ side in current policy. This will make the upper middle income folks (at least me) who pay the ‘full fare’ felt ‘less punished’ by being a responsible parent and modle citicen all my life.</p>
<p>Another thing is the state U is funded by resident’s tax money. If a resident’s kid chose go out of state U, why can’t he eligible some portiong of the ‘fund’ that he would’ve eligible if he chose to attend a state U? Just like the most k-12 publice school is funded by district resident property tax, when a student need special education somewhere else, the family usually can draw some fund from the school district to pay for the school out of the district. </p>
<p>Finally, kind OT question but related to above state fund, we just recently got a letter from something like ‘state high education board’ state that ‘the school’ (which my kid chose to attend to, an out of state private) is not eligible for the fund from them, but we still eligible to apply FASA, etc. AFAIK, we diddn’t file anything to this public organization. How did they know where my kid go? Or was it the school file on our behalf ask for money? Yet, back then my kid had not committed to the school. And the school clearly told us very early we are not qualified (based on our college board profile that we filed last year), thus we diddn’t even bother send them our ‘tax return’. It is still a mystery to me. What cause the state board send us the letter?</p>
<p>I agree with that. I cannot borrow money to fund my retirement; my S can borrow money to finance his education. And we have to have someplace to live.</p>
<p>Oh, so after 5300 I must file a return. Is it possible for me to just make less than that and not file a return? Just claim that I made nothing for the fiscal year? Is that fraud? </p>
<p>If I don’t file a return, I still should put it on my fasfa as work-study? Or should I just leave it blank?</p>
<p>When I was reading fasfa rules, It said somewhere that a student was given an income ceiling of 3000 and after that, 50% went towards your EFC. Can anyone refute or verify?</p>
If you do not make enough to file a tax return then you do not have to file a tax return. That is not fraud. However it is often beneficial to do so if you have had taxes deducted because you will probably be entitled to a tax return. You still have to report your income on FAFSA even if you do not file a tax return. Not doing that would be fraud.</p>
<p>
Yes the 1st $3080 of non WS income (for a dependent student) is protected income. It actually ends up being a little more than that with allowances for fico taxes but that is the official amount for 2008-2009 FAFSA (it changes a little each year). After that 50% goes to the EFC.</p>
<p>
I think you do not show it if you do not file a tax return. When you file taxes the WS is included in the AGI so you show it on the worksheet in order for it too be deducted from the AGI. If you don’t file a tax return you do not include the WS as untaxed income so do not show it on the work sheet. I think. Don’t have time to check it right now.</p>
<p>Owlice, I stand by what I said. I live by Shady Grove Hospital. MY area really isn’t having real estate declines. In fact, it might even be going up a bit..</p>
<p>Anothernjmom, setting up a section 529 plan while kids are in college might still be good since neither you nor your child will be taxed on the earnings used for qualified expenses. However, the generally rule is that the longer the funds can stay in the plan, the better. Since your kids are in college now, the benefit will certainly be less than if you had a few years to accumulate wealth.</p>
<p>You can also use these funds for other kids, which might open up more options. I think they are also allowable for grad school.</p>
<p>I think I was wrong. You have to report your earnings on FAFSA even if you do not file a return and those earnings would include work study. So you would report it in earnings then report it again on worksheet C (which is used to deduct it from earnings).</p>
<p>Emeraldkity4 asks,"However, you can refinance a principal residence, even in todays environment, and get money out. </p>
<p>and if you can’t afford increased payments?.."</p>
<p>Response: Well if you can’t afford taking out a home equity loan that is usually fully deductible on debt up to $100,000, how are you going to afford taking out personal student loan debts which might be only deductible up to $2,500 a year of interest, if that much?</p>
<p>I have a question about scholarships. I understand that funds to pay tuition, fees (?), and books are non-taxable, but room, board, and any other expenses paid are. If so, are they subject to FICA and medicare? Does the college usually withhold (in which case we’ll get less than he really needs) or not? And are they usually taxable at the state level as well?</p>
<p>I don’t think they are subject to FICA and medicare taxes. Probably they are treated the same way as work study where they are taxable but not for medicare or FICA. I am basing this solely on my own opinion and not any actual tax knowledge *plus *the fact that tubo tax did not come up with any fica/medicare tax requirement when we included the taxable scholarships/grants. </p>
<p>My daughter had some taxable scholarship/grant money - the school did not withold any taxes. It was up to us to figure out what was taxable and report it. </p>
<p>In our case our State tax returns are based on the income reported on the federal return so yes they were taxable at the state level also. Which raises another question. Our daughter is at an Instate school so we were not dealing with earnings from another State. I wonder how the taxable scholarships would be handled if you have to deal with more than one State? Any tax experts out there?</p>
Yes, I have refinanced twice in the past 8 years or so, and each time it cost me $$$$. Points. Appraisal fees. Title company. In one case, a prepayment penalty on 2nd note. Thousands of dollars added in to the original debt, all told. And I’m not stupid – I definitely did some shopping around to get the best deal. But I’m not rich either, and mortgage companies have a tendency to make decisions based on your income – I barely qualify for financing my home even when the payments will be less than what I am already paying. All of the refinancing & “taking money out” left me owing more on the home in 2005 than I did when the home was originally purchased in 1988 … so I hardly see where using the house as a bank is in my long-term financial interest. (The good news is that the last time around, I refinanced with a fixed rate on a 15 year note, at the time when interest rates had pretty much bottomed out – it is the last time I am going to play this game of enriching the mortgage company – I also did the math at the time and figured out it would take something like 5-7 years before my net “savings” in interest would begin to exceed the closing costs incurred in the refinance).</p>
<p>I understand where you are coming from, taxguy – you and my CPA see those points paid as an extra write off to be added on the Schedule A. I see it as real money, spent.</p>
<p>
There are two houses on my block that have been on the market for 6 months or more. The one across the street now has a “for rent” sign on the front – the owner purchased 2 years ago at the peak of the market, then invested thousands of dollars to fix it up – it really is gorgeous inside, “House Beautiful” located right in the midst of a working class neighborhood, but there is no way the owner will ever recoup his costs – he had to hire an out of town realtor to market it because no local realtor would agree to handle the sale on the terms he wanted. I don’t know as much about the house on the corner, except that there is a big “price reduced” sign on the front.</p>
Taxguy, when you REFINANCE or take out a HOME EQUITY loan, the banks look at your INCOME and will only approve a certain amount based on qualifying income. That is my problem - I have a house that was purchased for about ~$200K and is now worth much more on paper, but on the last refinance I barely qualified for a $200K note. </p>
<p>The PLUS loans do not require income verification – only good credit. Is it easy to pay? No, but that is a choice I can make. I can deduct the interest, and if I ever fall behind in PLUS loan payments, they can’t take away my house. </p>
<p>In any case, this started with the idea of taking $200K in savings and paying them toward the house. So we can imagine a family that’s got that nest egg, and then the primary wage earner is laid off and income plunges. They have excellent credit from all of the prior years, but they can’t get the $200K back out of their house because their current income doesn’t qualify - so they are forced into borrowing at a time when it really is a hardship for them… all because they were too greedy to be willing to pay their fair share of college expenses, and were more interested in sheltering money than in planning in a way with their long-term economic security in mind.</p>
<p>First advice for anyone ever going through re-fi. Never pay points unless you are 100% certain that you will pay that note as-is for its duration. I made the mistake of paying points once, on our first house. I was young and didn’t know better.</p>
<p>In fact, you can negotiate all “fees” (which are also negotiable) into the interest rate (albeit a bit higher - there are formula for these calculations). This type of refinance allows for the flexibility to redo at your need. You just need to find the right broker to do this. In fact once, I actually refinanced 2x within a 6 week period (yup 2 closings exactly 6 weeks apart) using the same appraisal and title work (you own them, since you pay for them). I put zero out of pocket, and had the $250 my broker charged for the 2nd refi added to the mortgage. The difference in payment gave me an 8 month payback on the $250. Mind you this was back during a time of falling rates.</p>
<p>And refinancing to pay the cash flow needs of college tuition, should take place as a planned activity done after you’ve gotten to the point using other debt vehicles (HELOC, etc) to the point where you only need one more cash infusion to make it to the end (preferrably right after you file FA forms for the upcoming Senior year). I don’t recommend serial refinancing of first mortgages as the difference in rate (as compared with HELOC financing) doesn’t make up for the additional transaction costs. Of course YMMV as rate spreads and amount borrowed can certainly affect the calculation.</p>
<p>Those of you with little equity that you can qualify to borrow against are in a whole different league where this discussion does not apply. For these people without the assets to borrow against and upcoming college debts that they cannot finance through cash flow, they really need to look at other alternatives (changing schools, etc).</p>
<p>Many states give tax deductions/credit for contributing to a 529. My state has a flat 9% income tax, a $2000 contribution per parent or $4000 per couple. Thus a $4000 contribution for 2007 could result in $360 additional money to the original contribution. And if this $4000 was held in a 529 with an APR of 5.2% and withdrawn after 1 week for qualified expenses; My return on investment, would be $360 (taxes), $4 (interest for 1 week on the $4000) for an annual yield of 473.2%, with virtually no risk.</p>
<p>So if the kid does not go to college, you make a closure of account in the same year of contribution, much as you would in over contribution in an IRA.</p>
<p>couple of popular options. 1) keep the money in the 529 for your future grandkids. 2) Never put too much into anything. That is why I like UGMA’s even though there may be later custodial issues (kid has got to find where I put it, and sue to get eventually get it - the law of possession), and taxes (what do I care about taxes when the UGMA pays it, rather the kid when he eventually wins)</p>
<p>Thanks for the answers TG and LP. We’ll look it up what 529 apply to our state. Someone mentioned the graduate school, can we use money in 529 help paying for graduate school?</p>
*plus *the fact that tubo tax did not come up with any fica/medicare tax requirement when we included the taxable scholarships/grants. </p>