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[quote=Anonymous][quote=Anonymous]OP no, I'm wondering if anyone has a good site about strategies for paying for college, beyond saving which I've done.  But I have a solo LLC and my DH is an S corp.

The popular FB site about this, called Paying for College 101, is really mean and not useful [/quote]

My own research says you can put your kid on the payroll and pay them a salary which you can then use for college, but they need to actually be doing something for your company and the degree needs to relate to your business.  So, if you run your own CPA firm, then if the kid is getting an accounting degree and you have them help out, it would qualify.

I think if you pay them up to the maximum standard deduction ($25kish?), then they pay no federal tax.  This of course only works if you are cash-flowing some portion of your kid's education (i.e., you can't get reimbursed from 529).  If you have saved a bunch in the 529, you could max out this payment and then only pull the excess from the 529 and then perhaps rollover the 529 for either grad school or into a Roth.  You can of course pay them the full tuition which again is tax deductible to you, but probably results in taxes for your kid.  You need to make sure the kid is actually paying the tuition as well, and not you.

Obviously, if you say pay your kid $50,000 per year which they turn around and pay over to the college, then the net cost to you may only be like $30,000 if at a 40% tax rate...though in theory, you will probably reimburse your kid for the income tax...so the net benefit might be like $15k.

You can also contribute like $6,250 per year to an education credit account.  Again, your kid has to be an employee of your company, but they can study anything.  I believe this $6,250 could create taxes for your kid because it is not W2 wage, but you can deduct the $6,250 from your taxes.

I would imagine all of this may raise IRS red flags, so not sure the financial savings > the audit risk.  I bet the $6,250 account is maybe an easier test but it's not a ton of money in savings to you.

I might talk to a CPA about the former option, and how much your risk of an audit increases when you put your kid on the payroll.[/quote]

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