As it seems like the GOP tax bill is about to be finalized into law, it is essential that parents of Jewish Day Schools students familiarize themselves with the new rules. This is because the bill includes ‘the Cruz amendment’, an amendment introduced by Sen. Ted Cruz(R-TX). What this bill changes is that, as put in the Washington Examiner, “currently, under federal law and within the existing tax code, families can deposit funds into 529 savings accounts tax-free, but those funds can only be used exclusively for college expenses. Cruz’s amendment allows for 529 savings accounts to be used for K-12 and college expenses, giving millions of parents and family members far more flexibility when investing in a child’s future.”
For parents paying Day School tuition, this can mean a break of many thousands of dollars. What it also means though is that parents that are serious about getting this tax cut should speak to their accountant as soon as this bill is signed into law, or perhaps even before, and set up a 529 saving account so that come January 1st, they can begin paying tuition from this tax-exempt account.
To be able to fully understand this provision and its impact on Jewish Day Schools in every state, sit with an accountant and a lawyer and see how this provision can benefit parents in that particular state, what implications it has, if any, for parents saving for their child’s college education, and how to best utilize a 529 account.
This amendment is especially meaningful to residents of New Jersey, the largest or second largest Jewish Day School demographic, who are going to get hit with higher taxes and fewer deductions. As Mark Zandi, chief economist for Moody’s Analytics, put it: “No one gets creamed more than New Jersey from this tax bill,” in which case some tuition relief would be can be extra meaningful for Day Schools parents.
The bottom line is: speak to an accountant who is up to date on the current tax bill as this may save you several thousands of dollars in Day School tuition.
Disclaimer: this article is not meant to provide legal or financial advice and should not be relied on for any legal or financial matter. This article is just intended to bring to your attention a potentially important issue. The author attended rabbinical school, where math and accounting were not the primary focus of the curriculum.