Using College Tax Credits Proactively

Bethorama33
Sat, 25 Aug 2012 09:55:18 +0000

Is this a good idea or do you see any potential problems with this plan?

We have two students going to college in 2013. In order to best use the American Opportunity Tax Credit, we plan on changing our tax withholding on January 1st of this year to equal the amount of anticpated tax credits. The money will be put in a seperate account monthly to only be used for qualifying college expenses.

If one child doesn’t end up attending college (which is possible) we would then still have the money available to pay in.

One forseeable risk would be if for some reason they do not extend this tax credit into 2013 and they also do not provide any other type of college tax credit to replace it.