QI am a volunteer Little League coach. Can I claim the mileage I drive to and from games, practices, league meetings, and tryouts as a charitable deduction?
V.R., Lincoln, Mass.
AYou may - or may not - have scored a tax-deduction home run. According to the IRS and accounting firm KPMG, ask your local Little League group if it is a "qualified" charity formally listed with the IRS as a 501-C organization. If it is qualified, you can deduct 14 cents a mile for your trips. If it has not been properly qualified, you don't get the deduction.
Incidentally, your question stumped a lot of experts!
QI have been contributing $500 a year for the past two years to my six grandchildren's education IRAs. All of these children, ranging in age from 3 to 16, will have to get some kind of help with grants or aid in order to go to college. Their parents are single mothers or make less than $30,000 a year. I am wondering if the IRAs will hinder them getting financial aid. I'm also wondering if having the IRAs invested in the S&P 500 Index is a good thing, since that index has lost ground in the past year. Is there something safer I could put this money into every year?
D.L., Malibu, Calif.
A"Yes, the education IRAs will hinder the children getting financial aid," says Paula Hogan, a financial planner in Milwaukee. The reason: The IRA assets are deemed to be assets of the children, and thus are counted by college aid officers at a higher value than they are worth, Ms. Hogan says.
Also, if the student takes a tax-free distribution of an education IRA, the parent cannot then take the Hope College Credit or the Lifetime Learning Credit as credits on their tax forms for that tax year, assuming the child is their dependent, Hogan says.
Her advice: Instead of contributing to the IRAs, open up a "Section 529" college savings program for each child. Hogan discusses these plans on her website at www.hoganfinancial.com. See the section on "quarterly notes."
Finally, regarding the IRAs, "check with your accountant to see if you might come out ahead by cashing in the IRAs," Hogan says.
Since the IRAs invested in S&P 500 have had "little to negative earnings this past year, the tax consequences from cashing them out may produce little to negative taxes or penalties for you," she says.
By Guy Halverson Questions about finances? Write:
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