529 Accounts for Private School

Under the Tax Cuts and Jobs Act (TCJA), your Section 529 (college savings) accounts can be used to pay private school tuition up to $10,000 per year per student. Previously, only college costs qualified.

From a Federal standpoint, if the money goes in and comes right back for the tuition, there is no tax saving. But if you have existing gains in the 529 account, an allocable portion of the distribution is earnings which escape taxation. And if you pre-fund future years, any appreciation will produce additional savings in excluded earnings.

Plus, some states, including Kansas, provide incentives for funding 529 accounts. In the Kansas example, contributions up to $3,000 per year per student (double that if married, filing jointly) are deducted from Kansas income. Of course, if you already contribute that much for college, no further state savings would occur, beyond the exclusion of earnings where state law usually follows the federal treatment discussed above.