"Helen P. OPlanick EA" <heljangal[at]aol.comnojunk> wrote:

- quote -

Thanks Helen and David,

That's what I thought, there's no tax provision for having
his bonus paid directly to a college or Scholarship! T/P can
be so creative!

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kbwing[at]comcast.net
says...
- quote -

Look over his stock/bond/mutual fund holdings. If he won't
have any gains this year, sell losers to generate $3,000 in
loses. If at all possible, it's best to declare losses in
different years than gains.

He can put money into a Sec. 529 plan for Child#1, but that
wouldn't help with current taxes (except in the few states
that give a deduction for contributing to a 529 plan). He
can't fund a "scholarship" if it is designated for anybody,
even somebody else's child, and get a deduction.

If his income is going to be unusually high (for him), then
perhaps he should consider giving money to a planned fund
(it's almost 1 am right now so I can't remember the exact
name). He would get the deduction this year, but can
distribute to charities in the future. Fidelity has one of
these funds.

Gary

--
You can probably X figure out X which letters to X delete to
derive my email address X.

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"Ken B. Winger" <kbwing[at]comcast.net> wrote:

- quote -

Under which tax code provision does one deduct setting up a
scholarship for one's child??

- quote -

--
David M. Woods, EA, ChFC, CLU
Woods Financial Services
Norwood, MA 02062
www.woods-financial.com

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- quote -

Gifts to kids are not deductible.

- quote -

Or just not take the bonus.

Helen, EA in PA
50 miles, 3 days, 1 cause - Multiple Sclerosis Challenge Walk for the Cure
October 1 to October 3, 2004
Donate on-line at www.msandyou.org

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T/P 40 yrs old - MFJ has following 2004 Projections:

Gross Wages: 135k - T/P only

401k Contributions: 8k

Itemized Deductions: 21k

Personal Exemptions: 10

Oldest Child: 17

As part of the $135k, 44k will be in form of bonus to be
paid a year end and wanted to know if there is any way he
can reduce his taxes any more? Perhaps setting up a
scholarship for Child#1?

To me, since he is covered under an retirement plan all he
can do is increase his 401k contribution to 13k and make an
IRA contribution in behalf of his wife for $3k. I am not
aware of any other legal investment option his employer can
use to avoid paying taxes on the bonus?

Any other suggestions?

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