# Taxing College Funds...



## Chuck Smith (Feb 22, 2005)

To go with the "free college" debate....

Obama now wants to tax investment funds. Yes those college tax funds you can set up to be tax free if the fund is used for college tuition and fees. uke: uke: He wants to punish people who were putting money away for their childs education or their own education. makes perfect sense RIGHT.... uke: uke:

https://www.atr.org/obama-tax-hike-coll ... tax-pledge


----------



## Chuck Smith (Feb 22, 2005)

This just gets me... Lets tax people for doing things correctly. You know saving for retirement (investments), people who pay off their homes and then make money off of that sale. Lets tax people who were savy in the stock market. Lets tax people who put money away for heirs.

Makes great sense. You know they want people to be responsible with money but yet now they want to tax it. Make you really want to plan for the future and work hard, save, make right decisions, etc. When you will get money taken away from you. uke:


----------



## Habitat Hugger (Jan 19, 2005)

Haven't heard any of this from any reputable news sources, even right wing ones like FOX. Tune in tonight and find out the truth. Could be the truth, but lots of stuff like this is broadcast and parroted around until they become Internet " truths!" 
Hope 529's don't become taxable. Have money set aside for grandkids.
This would surprise me if it does turn out to be true but no one knows for sure till its announced, and most usually turns out to be pretty subjected guesses. 
The e- mails will be going out to John and Heidi tomorrow am if it is true! And to that web site if it isn't.


----------



## blhunter3 (May 5, 2007)

Taxation is nothing more then a penalty for successful.


----------



## Chuck Smith (Feb 22, 2005)

HH...

What I have seen out there is that he wants to take an "gains" on investments. So now the 529's fall into investments. He is looking to lift "loop holes" as he called it in the tax system. Which any tax deferred interest gains is considered a loop hole.

Like you said nothing is in stone as of yet.

But where else is he going to get money with out "raising" taxes on just the "rich". Because all of the stuff he wants to do is going to cost more than raising taxes on the "1%". WOW... that just sounded like a motor cycle gang. HAHA.


----------



## Habitat Hugger (Jan 19, 2005)

Naw Chuck. This is justone more thing thought up and twisted by some of those right wing websites. The college funds, 529's and home mortgages and. 401K's are so sacrosanct that NO political party would dare to tough them. Yet every once in a while we get the scare nonsense from the right wing, trying to stir up more OBAMA/hatred as nauseum. Had coffee with a bunch of snowbirds this am, probably every single one of them Republicans, all hunters and fishermen. But every single one of them expressed dissointment in the Republican bosses and who make the game plans, and several said the same thing that I've dated to say on hunting fishing websites. That is IMO There are hundreds of legitimate important things to criticize Obama about,so why manufacture a lot of crap that never. Omean true. One of them even said that if it comes cutnpaste froma right wing website it is ALWAYS untrue, and like I said, these Are comments from long term Republicans.

Like I and many others keep thinking....do I ( we) want to support and associate ourselves with people like this?????


----------



## Plainsman (Jul 30, 2003)

> Tune in tonight and find out the truth


 :rollin: Well that didn't work did it?



> every single one of them expressed dissointment in the Republican bosses


I wrote Kevin Cramer an email telling him I thought Lindsey Graham, John McCain and Boehner were a disgrace to conservatives, and an enablers to Obama's failing policies. When the republican party called I told them I would not give them a red cent because they are simply liberal light. I told them if they run someone like Chris Christie, Jeb Bush, etc I would not bother getting out of my rocking chair to vote. I am sick of all of them.


----------



## blhunter3 (May 5, 2007)

Plainsman said:


> > Tune in tonight and find out the truth
> 
> 
> :rollin: Well that didn't work did it?
> ...


Rand Paul!!!!!!


----------



## Chuck Smith (Feb 22, 2005)

HH...

I wouldn't say Mortgages, 401k's and 529's are off the table for taxing. He was trying to push a bill to have the mortgage interest not be a tax deduction. He did this in his first term as president. The National Association of Realtors fought to get that off the books. So I could see him go after it again. He also wants to increase taxes on inheritance. So isn't a college fund set up by a grand parent an "inheritance"??? Lets say you pass and the benificary is a grand child. It could not be considered "inheritance". But like I stated....lets see what pans out. But I would not say anything is off the tables to be taxed. Because where else are they going to get the money to pay for all the spending???


----------



## Habitat Hugger (Jan 19, 2005)

Nope, it didn't work did it Bruce. Still makes me wonder why this prophesy is only made on one website. Two counting FOX who published a link to the first right wing website. No other news service or commentaries say anything about it, which makes me think it is the same old, same old......I'm not saying they are wrong, just that the odds of,this ending up being true are somewhere between slim and zero. 
Speaking specifically of 529's....
I'm trying to think I'd there is a maximum one can invest in a 529 for kids or grandkids. IF a super rich person we're investing great gobs of money in there specifically to avoid taxation and NOT for education, I'd sure have no objection to closing a loophole in an otherwise well meaning set up plan. But seems there is a maximum if I recall correctly. Far from being in a "Rich" category I put a bit of money away each year in lieu of useless Christmas junk presents so each grandchild will at least have a chance to get a semester or two of secondary education. Definitely not a tax loophole for me! If a kid doesn't go to college I can switch the beneficiary to another grandkid or divvy it up for them all,OR use it myself, though if I use it myself I have to pay tax on it! I don't know what rate of tax it would be, but if it is low, then perhaps some rich people ARE using it as a loophole, in which case, as they are not using it as intended, sock it to them in taxes.

Trouble is, every time any politician calls something a tax loophole, the other side automatically yells FOUL! Higher taxes, ad nauseum, even though a lot of so called loopholes SHOULD be plugged! Like it or not, the Republicans seem to be the worse offenders at this! Why not work together in a bipartisan way to close obvious unfair tax loopholes? Work together!?! Yep, I hope to shoot that 897 inch buck, too!


----------



## Chuck Smith (Feb 22, 2005)

> If a kid doesn't go to college I can switch the beneficiary to another grandkid or divvy it up for them all,OR use it myself, though if I use it myself I have to pay tax on it! I don't know what rate of tax it would be, but if it is low, then perhaps some rich people ARE using it as a loophole, in which case, as they are not using it as intended, sock it to them in taxes.


Here is the thing... If the kid doesn't go to college it would then become and inheritance. Which is an "estate" tax. Which he wants to increase.

So lets say the grandkid doesn't go to college but wants to use that money as a down payment on a home. Which I am sure you would be more than happy to let them use that money for that good cause. Now it will get hammered by a tax.

Also people invest in other things and set up trusts so kids can't touch until they are 18. Some of them have stipulations on them that the money can only be withdrawn and go towards school payments. These are the non 529's. So again people set up funding for education via different investment routes. Now they could get taxed!! Or get taxed at a higher rate!

Anyways. Nothing is set in stone it is all talk so far. But it is something to keep an eye on.

Like I stated... with his vision of free 2 year college, free internet access or more internet access, etc. (stuff he said in the state of the union).... they need to come up with more money! Only way is taxation. He said he wants to take it from the top 1% of American's. Well that is going after investments. Which many of the top earners invest also in the same things the average joe's do. But at a higher volume. But again... it is something to keep looking at to make sure you don't get hamstringed.


----------



## Habitat Hugger (Jan 19, 2005)

You are a long way from the rules for 529's chuck! Basically if the accrued money is used for anything BUT college it is already subject to tax. That's the idea of the whole 529 thing in the first place, if they are capable of being a loophole some other way then yes, IMO that loophole should be closed! But NOT subject to tax if the accrued interest is being used for college or higher education.
Seems every time a good tax break is introduced some shyster, usually a rich shyster, will find a way to use it to cheat the rest of us hardworking guys out of some money to line their own pockets. If 529,s are used like this be some shysters. , I suspect you will agree with me that it should be stopped!


----------



## Plainsman (Jul 30, 2003)

> Still makes me wonder why this prophesy is only made on one website.


Have you noticed the two prophets Chuck Smith and Plainsman have been on 100%. Ahhhh lets see just for highlights that includes Obamacare, double crossing Israel, taxes under $250K, unsecured borders, amnesty and on and on and on taxes taxes taxes. You have to admit we were right on absolutely everything we debated about. Then there was one guy who was wrong all the time. He don't want us to use his name, but his site name was R Y A N. :rollin:


----------



## Chuck Smith (Feb 22, 2005)

HH..

If there is a program that you can put money in and then have special tax treatments... Roth IRA's, 529's, Estate planning, etc. Then they should remain that way. What is getting purposed is to tax these types of things. Average joes are using the same things for themselves. They are just not using it to the volume like the 1%. But that is the basis for what the president wants to do and how he is going to get funding. Example... I have a handicap brother. My mother put money into a fund that when she dies he will have this funding for him to live on. She got money when her and her siblings sold the family farm. So she wanted to make sure my brother was taken care of. So she set up a fund for him. (I am not sure what is the tax code on it). But the pay out to my brother were not supposed to be taxed if they are used for my brother because it was taxed already. Well talking to my mom... who found out from her financial advisor. This is one of the funds that Obama could be targeting!!! Because it is an "inheritance" or the "estate tax" you hear people talk about. See no funds, trusts, or investments are safe.

Again we will just have to wait and see on this one.

But it is scary because why save up any money when you will get taxed on it. Sometimes twice... once as income and another as "investment payout". They also want to mess with "capital gains" on home sales or real estate. So when they tell you your home is an "investment" and everyone should have a home... they just want to tax you more on it!

edit:
Plainsman... People like to keep blinders on. It is sad but true. Honestly i wish i was wrong on some of the things. Because if more of my "sky is falling" stuff with Obamacare comes true... We are in a far more world of hurt. But many people don't see it yet. Premiums from the "exchanges" will rise and the funding for the subsidies will have to be higher and then subsidies run out!! (some of this is already happening...rise in premiums???) Then what???? Back to square 1... people can't afford insurance.


----------



## Chuck Smith (Feb 22, 2005)

> Like it or not, the Republicans seem to be the worse offenders at this! Why not work together in a bipartisan way to close obvious unfair tax loopholes?


Many of the top earners in the USA are not republicans. It is about a 50/50 split or pretty close. Look at the top earners in congress... Many are Dem's. But I digress.

This is also why I don't think what Obama is talking about will happen. But it is something to keep an eye on.

The one that gets me is that many people invest to help pay for the rising costs of education. Yet he talks about taxing investments or higher tax rates on certain investment returns. Which many people will use those vehicles to pay for education. But then he wants to give free education. So he wants to take away from people doing things right and pay for people (which it will get abused) who could be doing it all wrong!


----------



## Chuck Smith (Feb 22, 2005)

> Obama drops proposal to cut tax benefits of 529 college savings plans


This was the title to the article on MSN today. So he was planning on taxing the 529's!!!!

But I am happy he retreated on this plan. Because it makes no sense to tax a college savings plan to help fund free college for everyone. It punishes people who are doing the right thing.


----------



## Habitat Hugger (Jan 19, 2005)

Every political party tosses out stuff to more or less think about. How to raise money to,squander on govt money wasting poltical payback programs. Taxing 529 wouldn't have a chance in hell of passing, neither would 401k's as mused by ? What's his name the vice pres with Romney?? ( he had and HAS some good ideas- pity he didn't get in last time) Anyway, all politicians come up with stiff that would NEVER fly! I still haven't seen anything official about 529's except the dropping suggestions to tax Em. 
Yes, if a kid downs go to college, Chuck, then you can transfer it over to another kid to use for college OR use it yourself or give it to the kid for a new toy BUT THEN ITS TAXED AS INCOME, as it should be. The whole idea is to help a kid wi education NOT buy a new boat or car! 
A Roth IRA is a bit more versatile, IN after taxx and OUT with no tax, but can be used for a bunch of things, pretty well,everything. I suppose OBAMA will be taxing this, too! 
But a don't sweat it! Your mortgage income and IRA's is always hungrily looked at by both political parties but all this stuff, including 529's are absolutely sacrosinct!


----------



## Chuck Smith (Feb 22, 2005)

HH.... The title of the article shows that the 529's were on the table. You are right nothing was on paper yet (a bill drafted) but it was out there and when the President talks about it. Not some representative. So you see it is a bigger deal when Pres says something because typically his cronies will jump on the bandwagon.

But anyways it is good that they took it off the table.

Now you talk about the home mortgages... only two years ago they (Demicrats) wanted to get rid of the tax deduction of the interest paid. It was written into a bill. It got lobbied very heavily by the National Association of Realtors among other groups. That bill got turned down as well. That was a bill that would tax the "interest" as income for the banking industry and then you as a home owner couldn't deduct that interest payment. So your net income would go up. So taxes would go up. So that money would be getting taxed twice. Anyways that bill got shot down.

But like I said... nothing is safe when we as a nation are running in a debt of about 10 trillion and need to find ways to make up the difference.

Now I will pay more in taxes for programs that are needed. But I don't want to pay for all the trash and programs that will fail or are failing. *Need to fix the leak in the bucket before you fill it up with water.*


----------



## blhunter3 (May 5, 2007)

My biggest question is why does college cost so much? NDSU cost me around $12,000 a year, not including food, rent, and books. I could figure in $400 a month for rent and internet, $200 a month in food, books per semester averaged $253. So per year college cost me $18506! Why does college cost so much? If I did not need a degree for my current job I would have never went beyond a two year college.

When I was at NDSU I tried figuring out where every cent I paid in, went to. All I got was the run around. As far as I am concerned all a college is, is a business designed to keep kids their as long as possible to make more money.

If we could figure out how to save money for kids college untaxed and cut the cost of college without adding a tax to pay for it, we would not have this problem.


----------

