If you’re like many parents, you may not have saved enough to finance the higher education of your offspring.
Strategy: Don’t panic. Look around for other tax-smart options.
Here are five ideas to consider late in the game.
1. Tap into your home equity. Generally, you can deduct the interest paid on the first $100,000 of home equity debt, regardless of how you use the proceeds. However, you can’t deduct the 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 unless you use the loan proceeds to make home improvements.
2. Borrow from your 401(k). Instead of taking an outright distribution from a 401(k) or other qualified retirement plan, you can borrow the funds. This means you’ll be paying you...(register to read more)