Predictable tax credits


I have two kids in college. One of them being a senior, I have experience getting educational tax credits. I'm considering adding those tax credits as non-taxable income in the years I anticipate getting them. (My son is a freshman so I have 3 more years to look forward to, assuming Congress doesn't eliminate them.) I'd be conservative in my estimates but it's money in the pocket that is otherwise ignored.



dan royer's picture

I did that too to try to get my taxes a bit closer. But if I recall, it made very little diff in my discretionary spending. I can ask Mike his opinion. He's the tax expert.

I think that you're handling it correctly. Of couse small credits for a few years have a small affect on the lifetime standard of living.

Thanks, Dan and Mike. In my case it might make a noticeable difference because the credits occur before retirement, and my regular assets hit 0 in the last year before retirement. That causes a break in the smooth standard of living. (That's okay with me because the discretionary spending forecasted for those years matches my budgeted discretionary spending.)

Because of that break, I suspect the added cash will isolated to those years and, being compressed into a short period, may be noticeable.

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