As of 2002, you'll be able to contribute up to $2,000 per child (up from $500) to an education IRA. Not only will you be able to save more but, starting next year, you'll also be able to put your contributions and earnings toward tuition, tutoring costs and other expenses for grades K through 12, as well as college. For these reasons, I have switched from not liking education IRAs to liking them very much. And for the first time, beginning in 2002, you can deduct up to $3,000 a year (rising to $4,000 in 2004) of any money you spend on qualified higher-education expenses directly from your income on your tax return, if you earn $65,000 or less a year as a single filer or $130,000 or less as joint filers.
The Marriage Penalty
If you and your fiancée were hoping the marriage penalty would be lifted before the wedding, plan on a long engagement. The increase in the standard deduction for joint filers won't be phased in until 2005 (when it moves to 174 percent of the standard deduction for single filers). The deduction will be exactly twice that of single filers in 2009.
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