Are your kids nearing the time to enter college? If you’re like many parents, you may not have saved enough to finance the higher education of your offspring. Now it’s too late to benefit to any significant degree from a Section 529 plan or other college savings vehicle.
Strategy: Don’t panic. As the clock ticks down, you may be able to turn to other sources, without paying a small fortune in taxes. Here are five alternatives for procrastinators to consider.
1. Tap into your home equity. Generally, you can deduct the interest on the first $100,000 of home equity debt, no matter how you use the proceeds. However, you can’t deduct interest on loans in excess of the value of your home after subtracting other mortgage debt.
Caution: The loan is secured by your home, so use this technique judiciously. Also, if you’re subject to the alternative minimum tax (AMT), interest paid on the home equity loan isn’t deductible.
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