In late April of this year the U.S. Department of Education announced that they will begin recognizing same-sex parent households in the Free Application for Federal Student Aid (FAFSA) application process. The application will still fail to include a same-sex or registered domestic partner marital status, but instead will use “unmarried parents living together.” The new forms will also use gender neutral language such as Parent 1 and Parent 2 instead of mother and father.

In some ways this feels like an accomplishment in recognition and equality, and it is; but, yet again, it is bitter-sweet. We can add this to the list of situations where DOMA’s existence requires an institution to create workarounds in order to function as intended.  Just as the IRS has had to do with certain tax returns, the Dep. of Ed. has had to modify its processes in order to acknowledge same-sex couple households without actually being able to recognize same-sex relationships.  Regardless, it is still progress towards equal rights, and, with those rights come responsibilities.

Beginning with the 2014-2015 FAFSA application cycle, income information from both parents will be collected.  In the past, students who have same-sex parents have only reported the income of one parent. Now that the income of both parents will be included, many students will suddenly find themselves eligible for less aid, and in some cases altogether ineligible. This is fair; this is how it is supposed to be. I’ve never felt bad about children of same-sex parents getting a little benefit out of structural inequality, but, I’d rather they have no special benefit and instead, finally, be treated just the same as everyone else.

Luckily, if you anticipate your child to be eligible for less funding than you originally planned for, there are other tools out there for paying for college. Some of the most commonly used tools are the various tax advantaged college savings plans.  Generally, these plans allow for tax-free earnings on your contributions as well as tax-free withdrawals if funds are used for qualified education expenses.

There are two types of college savings plans; 529 Plans and Coverdell Education Savings Accounts.

529 Plans

529 plans are state sponsored plans. This means that the attributes of each 529 plan are unique; each state does it their own way.

Washington’s 529 plan, the Washington State Guaranteed Education Tuition (GET) Program is a pre-paid tuition plan.  This plan allows contributors to pay for tomorrow’s tuition at today’s price. In a climate where college education costs have nearly doubled in the last 10 years, this plan becomes quite attractive.

Contributions to WA’s GET program are in the form of “unit” purchases.  One hundred units is equal to one year of resident undergraduate tuition at WA’s most expensive institutions, currently either UW or WSU.  The value of your units will always be the current value, meaning, if you buy 100 units in one year, and five years later the cost of tuition has risen, your 100 units are still worth one year of tuition at current prices.

Coverdell Education Savings Accounts (Coverdell ESAs)

Coverdell ESAs are tax favored savings accounts. The contributions are not deductible; however, the earnings are tax-free. Unlike 529 plans, Coverdell’s have contribution limits, both in amounts that can be contributed and in eligibility to contribute at all. Contributions to Coverdell’s are limited to $2,000 per student per year.[i]  One benefit the Coverdell offers that 529 plans do not is the ability to use the funds for K-12 education. The tax-free and penalty-free withdrawals are not limited to post-secondary education as they are with 529 plans.

In addition to college savings plans, the IRS offers various deductions and credits to taxpayers who are paying for higher education.  It is possible to receive benefit from financial aid, college savings plans and deductions/credits in the same year, but they are not independent of one another.  Coordinating your education benefits is a critical piece of college planning. For example, funds you have set aside in a savings plan may affect a student’s eligibility for aid. Or, a taxpayer may or may not be able to exclude scholarships from their income and claim an education credit in the same year, depending on amount and type of education expenses incurred.  Education assistance benefits from an employer will also have an effect on other education benefits.

No matter what your personal situation is, and whether or not the Department of Education’s announcement affects you, maximizing your education benefits can make a significant difference in your ability to pay for college. Start planning now!

[i] This amount begins to phase out based on the contributor’s Modified Adjusted Gross Income.

Thank you to our current and former team members and colleagues for helping us develop this content.

QuickBooks Online Basic Training (for Nonprofits) - Part 1

$ 100

This training is designed for the accidental operations manager, board treasurer, executive director, or anyone else who needs to understand how QuickBooks works so you can accurately and confidently record and track your organization's financial information. It covers the basics of bookkeeping, QuickBooks vocabulary, data entry for income and expenses, and basic troubleshooting. To help you understand the why behind it all, this course also includes and introduction to basic accounting concepts. Although this training assumes no prior QuickBooks knowledge, there's still plenty to learn for those who need a refresher, need nonprofit specific training, or who are coming to QuickBooks Online from Desktop.

Purchasing this training grants you access to our portal, where you can view the video and presentation slides at your convenience.

QuickBooks Online Basic Training (for Nonprofits) - Part 2

$ 100

Building on Part 1, this training will show you how to verify your data entry and create useful reports for both staff and board that will help you make decisions. This training covers QuickBooks' banking integration, reconciling accounts, generating and manipulating reports. You'll also learn how to handle non-cash activity and understand the difference between cash and accrual accounting.

Purchasing this training grants you access to our portal, where you can view the video and presentation slides at your convenience.

QuickBooks Online Intermediate Training (for Nonprofits) - Part 1

$ 100

So you feel comfortable with QuickBooks data entry, but you still have a feeling there's a lot QuickBooks can do that you're not taking advantage of? Our two-part series of intermediate trainings are for you. In Part 1 we cover ensuring your QuickBooks is set up in the best way to capture different kinds of information: functional expenses (program vs. admin and fundraising), grants, and multiple entities like fiscal sponsorships or related organizations. You'll learn why this tracking is necessary, how to gather the information you need to do it, and how the information is used. budgeting -- for your whole organization, specific programs, and even grants.

Purchasing this training grants you access to our portal, where you can view the video and presentation slides at your convenience.

QuickBooks Online Intermediate Training (for Nonprofits) - Part 2

$ 100

Building on Part 1, in this training we'll take your fully tricked out QuickBooks and put it through the paces, covering how to track grant expenditures or invoice against reimbursable grants, how to allocate expenses across multiple programs, and how to manage multiple entities such as related 501(c)(3)/(c)(4) orgs. This course also includes general background and training on fiscal sponsorships such as what to consider, how to set them up, and the differences between fiscal sponsorship models.

Purchasing this training grants you access to our portal, where you can view the video and presentation slides at your convenience.

How to Review a 990 for Staff & Board

$ 100

This training reveals the mystery contained in the many pages of Form 990 and its associated schedules. You will learn from the perspectives of both a CPA 990 preparer and experienced nonprofit director. Nonprofit staff will learn how to review a drafted 990 and work with the external tax preparer on any needed adjustments. Board members will learn how to review a finalized 990, and which parts of the form are of greatest concern. This training is also useful to anyone who wants to better understand some of the "why" behind many nonprofit accounting structures, practices, and terminology.

Purchasing this training grants you access to our portal, where you can view the video and presentation slides at your convenience.

1099-MISC & 1099-NEC Training

$ 75

Every January your organization is responsible for providing 1099 forms to certain independent contractors who you paid more than $600. In this training we'll go over the ins and outs of which contractors this applies to, and how to build your systems so that it's not a crunch to prepare.

Purchasing this training grants you access to our portal, where you can view the video and presentation slides at your convenience.

Coming this summer, check back often!!

We offer trainings as 1:1 sessions, customized private trainings for you and your team, or sponsored customized trainings for your community members. Contact us for more information.

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