Saving and paying for college is a major source of stress around this time of year. The cost of both private and public schools certainly isn't going down. Many parents of college-aged children are receiving tuition bills in the mail, no doubt eager to shell out the big bucks for classes, room and board, and so on. This is also the time when many folks start to wish they'd opened a 529 college savings plan to help pay for college, and think that it's too late if a student is already in, or approaching college. Truth is, it's not too late, and there are some tangible benefits for parents who plan to plan to help pay for college costs out of pocket.

Consider this: New York State taxpayers can deduct up to $5,000 in contributions from their state income tax return each year. This number increases to $10,000 if married filing jointly. That's the big benefit - but what makes it really work with a college-aged child is that there is no time limit for keeping the assets in the 529 plan, meaning that you could make a contribution today, and take it out a week later to pay for tuition, room & board, or other qualified education expenses. In doing this, a state income tax deduction is created in the amount of your original contribution - with the same dollars you were going to use to pay the bill from the beginning!

Some things to consider:

- Choose wisely when selecting your investment options if you plan to make a quick withdrawal. Luckily, New York's 529 College Savings plan has a money market mutual fund that removes any risk due to fluctuations of the stock market. This ensures that your money will be there when you go to make a withdrawal.

- 529 plans are only for higher education - meaning college expenses (graduate school also qualifies). Saving for pre-college expenses is best done through Coverdell Education Savings Accounts.

- Money must be used for qualified education expenses. Things like tuition, as well as room and board are the big ones, but the purchase of textbooks (which are not cheap) also qualifies.

- If you are not a New York taxpayer, you'll want to consult your state tax laws, as not all states allow for 529 contributions to be deducted, and others have rules regarding how long contributions may be kept in 529 plans before use for college expenses.

- Always consult your tax preparer with tax questions.

Will this strategy make you rich? Probably not. What it will do is allow you to help your child further their education, but with an added benefit to yourself come tax season - and that's a good thing!

Chuck Wade

(This article contains the current opinions of the author but not necessarily those of Brighton Securities Corp. The author's opinions are subject to change without notice. This blog post is for informational purposes only. Forecasts, estimates, and certain information contained herein should not be considered as investment advice or a recommendation of any particular security, strategy or investment product. References to specific securities and their issuers are for illustrative purposes only and are not intended and should not be interpreted as recommendations to purchase or sell such securities).