If you are starting to make enough money that you’re looking for avenues to lower your tax liability and/or invest your money AND you have kids…. you might want to consider looking into a Coverdell Education Savings Account.
The Coverdell Education Savings Account allows you to contribute $2,000/per child each year from your pre-tax earnings.
Yes, you will be spending $2,000, BUT try looking at it from this perspective….
You will likely be taxed on that $2,000 at least 15% (depending on your tax bracket) by the feds. Those of you from Oregon will be taxed an additional 7% (also depending on your tax bracket). That would make the total tax due $440. Deduct that from your earnings and your $2,000 quickly turns into $1,560!!
Now here is where you’ve got to see this from a different angle… If you contribute now, you are basically spending $1,560 and the government is GIVING YOU $440 (…again, these numbers vary based on your tax brackets, so change them around to fit your situation).
There are not a lot of places that you can invest your money and receive an immediate 28% return like this one. That’s why I think that if your interested in having your money make you money and you know that someday you will be paying for your children’s education, take advantage of this now!!