Author Topic: What to do with my sons money!  (Read 3391 times)

soccerluvof4

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What to do with my sons money!
« on: September 20, 2014, 05:46:13 AM »
As my son is now a sophomore in High School and I have 3 more kids behind we are playing a bit of catch up on college funding because we thought we would just pay for it when it comes. Well business is not as stable blah blah blah.  We want to help as much as we can but only above meeting our own goals. In other words not ruining our total fire plans. So this might be one year or two-3 max. We max out our 401ks etc...

  As of now each child has about 25k in there 529s and we will continue to add the 3k per kid per year but we want more options as the opinions are all over the place on 529s and we only get a State tax break up to 3k per kid per year.   I spoke to my account and he said he can make 6k or 6100?  a year and we dont have to pay federal or state tax?  and we just have to pay FICA.  So since we own our own business about 3 weeks ago we started putting him on payroll usually 15$ and hour times 20 hrs and we change it each week to look good( couple hours less or more).  My question is since we are high income earners 300k combined whats the best thing to do with the money where we still have control and it does the least amount of damage to him or us if he needs to apply for money down the line for school.  We plan on doing the same once he gets a job this next spring as he will be 16 then with our daughter.  Please if you have a suggestion explain it like to a 5th grader! lol.  And thanks in advance!

Let me just note he does not know about the money and we want to keep it that way. All our kids know is that we are trying to help them for 2 years depending on how things go. We want them to take on some responsibility as well.
« Last Edit: September 20, 2014, 05:49:06 AM by soccerluvof4 »

Thegoblinchief

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Re: What to do with my sons money!
« Reply #1 on: September 20, 2014, 05:58:14 AM »
1. Consider that, being a high income family, regardless of what you plan to help with, your income and assets are factored in on the FAFSA applications.

2. Last time I looked, the Wisconsin 529 plan was kind of a joke. Past threads have suggested that good 529 plans like Utah are worth enrolling in, even out of state without the tax benefits. Not sure if that is still the case with income as high as yours.

ch12

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Re: What to do with my sons money!
« Reply #2 on: September 20, 2014, 06:39:56 AM »
1. Consider that, being a high income family, regardless of what you plan to help with, your income and assets are factored in on the FAFSA applications.

To expand: Since you already have a sizeable 'stash, it might be in your best interest to not make that much his junior spring/senior fall. The FAFSA looks at your assets, which you have a fair amount of, and your income for the year prior. Your child is likely to only be eligible for merit scholarships with your 'stash and 300k income. Since anybody on these forums is unlikely to tell you to diminish your 'stash, you can diminish your income.

It will get easier with each additional child, since the FAFSA expected family contribution is divided per child currently enrolled in college. I would suggest reading the Expected Family Contribution PDF from FAFSA. https://studentaid.ed.gov/resources#information-on-getting

Also a classic MMM article breaking down the numbers for a college student residing at home:
http://www.mrmoneymustache.com/2011/05/12/the-coffee-machine-that-can-pay-for-a-university-education/

Here are the tuition numbers for UW Milwaukee, instead of MMM's UC Boulder: http://www4.uwm.edu/admission/financialaid.cfm

I will also say that money in a 529k can be put towards room and board (if your child is not living at home, say attending UW Madison). If you want to pay more on top of that, the money that you put towards tuition CAN be deductible if your income is below a certain threshold. Your income is above that threshold, which is currently 160k. http://www.irs.gov/publications/p970/ch06.html#en_US_2013_publink1000295026

Also, you will be able to get the American Opportunity Tax Credit, which is 2500/year for the first 4 years of college. It's dollar for dollar the first 2k you put towards your kid's college expenses (including books), and 25% of the next 2k. http://www.irs.gov/publications/p970/ch02.html

soccerluvof4

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Re: What to do with my sons money!
« Reply #3 on: September 20, 2014, 06:10:14 PM »
Thanks for those links..


Argyle

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Re: What to do with my sons money!
« Reply #4 on: September 20, 2014, 06:50:40 PM »
U.S. savings bonds can also be used for educational expenses tax-free, so that's sort of a way of extending the amount in a 529, plus you can take it out and use it for other purposes if you need it.  You can put in $10,000 per person per year electronically (so that's $20,000 for two earners), plus $5000 per year in paper bonds if you buy them with your tax refund.

MrFrugalChicago

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Re: What to do with my sons money!
« Reply #5 on: September 20, 2014, 08:43:33 PM »
Pretty sure paying ghost employees is not frugal and jail is not moustache.

soccerluvof4

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Re: What to do with my sons money!
« Reply #6 on: September 21, 2014, 04:48:44 AM »
Pretty sure paying ghost employees is not frugal and jail is not moustache.


Hes not a "Ghost employee" were keeping track of the hours and he will be working them.  Just trying to figure out best place to keep the money is all. 

MrFrugalChicago

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Re: What to do with my sons money!
« Reply #7 on: September 21, 2014, 09:49:29 AM »

Hes not a "Ghost employee" were keeping track of the hours and he will be working them.  Just trying to figure out best place to keep the money is all.

Paying family members before they work hours? Might want to run that by your CPA...