New Tax Law Advantages that will Help Private School Families

New Tax Law Advantages that will Help Private School Families

As many of you know, Congress and the President signed into law a new tax bill that is more favorable for families who invest in a K-12 private education.  

You may recall that before the academy closed for the Christmas break, you were invited to contact your representatives in Congress to communicate to our legislators your support with keeping the following four key provisions in the final tax reform legislation:

  • Expand the 529 college savings plan to include K-12 education
  • Allow schools to provide tax-free educational assistance to members of the staff
  • Double teacher deductions for personal classroom expenses
  • Preserve tax-free tuition costs to the children of teachers and staff

All of these provisions did remain in the final version of this tax reform bill, which benefits all independent and religious schools across the country.  One notable point we would  like to make you aware of is the new K-12 provision with 529 savings plans.  The 529 plan has been a popular way for families to save for their children’s college tuition.  The Council for American Private Education (CAPE) reports that 75% of 529 plan owners were in middle-class families with household incomes of $150,000 or less.  The broader, more flexible inclusion of K-12 education in 529 plans will be a tremendous benefit to families desiring to invest in their children or grandchildren’s education in their formative years.  According to CAPE, “A Q&A document from the IRS touts the flexibility of 529 plans, noting that anyone can establish a plan for any beneficiary, including relatives and friends. There is ‘no limit to the number of plans’ one can set up and there are ‘no income restrictions’ on either the contributor or the beneficiary.”

The maximum distribution for K-12 tuition is $10,000 per year, per child, tax free for public, private or religious elementary or secondary school expenses.  The North Carolina Association of Independent Schools (NCAIS), of which Wesleyan is an active member, reports that the ability to grow education funds in the 529 plan tax free and use them for qualified education expenses without paying any tax on the gains, will be a significant advancement for independent schools.  One important note, in order to avoid potential penalties, families will need to wait until all of the policies and procedures have been finalized before withdrawing any funds.  Current parents, grandparents and out-of-state relatives who want to start or utilize a 529 plan to pay for the tuition of a child attending a N.C. school will need to consult their state’s 529 authority or tax advisor.

Other avenues of assistance for families who live in North Carolina and are seeking a private education are the Opportunity Scholarship Program (OSP), Children with Learning Disabilities Grant (CDG), and Educational Savings Accounts (ESA). Did you know:

  • The OSP is a program for students currently attending public schools or entering kindergarten whose household income qualifies. The award amount for the OSG is up to $4,200, and families who receive this are still eligible to apply for tuition assistance through FACTS at Wesleyan Christian Academy. Approximately 54 WCA students receive funding from this program.
     
  • The CDG program was created by the North Carolina General Assembly to help parents pay qualified expenses for children with diagnosed disabilities and a public school issued Individualized Education Plan (IEP) who attend school in an eligible non-public setting.  The award amount for the CDG can be up to $4,000 per semester / $8,000 per year, regardless of income. Approximately 19 WCA students take advantage of this benefit.
     
  • The ESAs are the latest addition to the state-funded grant programs and are similar to the CDG, in that they provide financial assistance for children with diagnosed disabilities and public school issued IEPs.  The ESAs award up to $9,000 per year via a state issued debit card and can be used for students enrolled in part-time special education programs. This is a new program and applications will be available beginning February 1.

The availability of funds for a private education has grown tremendously in NC over the past few years, and the recent change to 529 savings plans is a further expansion of these benefits.  If you know of families who would be interested in attending Wesleyan, please inform them about these tremendous opportunities. Our Admissions Director, Angel Taylor, is available to share about the academy, the NC grant programs, and 529 savings plan.  Please feel free to contact her at 884-3333 ext. 263 or ataylor@wcatrojans.org.

Thank you once again, for investing into an academically strong, Christian education for your children at Wesleyan.  We appreciate and value the partnership we have with our families as we work together to provide a great educational and spiritual environment for your children.

Dr. Rob Brown
Head of School