ADVISORY/Survey Says Half of Taxpayers Will Pay Off Debt with Tax Rebate Checks; 25 Million Eligible Taxpayers Start Receiving Child Credit Rebate Checks This Week

Business Wire, July 24, 2003

News Editors/Business Editors

ADVISORY...

--(BUSINESS WIRE)

Beginning today eligible taxpayers will receive rebate checks up to $400 per child under the age of 17. What will people do with this unexpected income?

In a recent survey conducted at www.turbotax.com, taxpayers were asked if they were to receive a rebate, what would they do with the money? The largest number, 46 percent, responded they would pay off credit cards and other bills, while 21 percent said they would save for a rainy day. Seventeen percent would invest in Education Savings Accounts. Other results show that 13 percent would prefer to spend the rebate money right away and three percent would pass it along to charity.

According to Fred Grant, CPA and Tax Analyst for Intuit Inc., makers of TurboTax(R) software, paying down debt can be the right approach for many. However, there are other smart strategies that make the most of this unexpected income and that provide tax benefits down the road. "When it comes to investing in your children's education, there are some definite ways to maximize your savings," says Grant.

Pay for College with a Qualified Tuition Program. Qualified tuition programs under Internal Revenue Code section 529 are tax-exempt college tuition plans that are maintained by a state or a private institution. There are two types of plans. A prepaid tuition plan allows you to purchase tuition credits today for use in the future. It's like buying tomorrow's education at today's prices. Alternatively, a tuition savings plan allows participants to save money tax-free for qualified higher education expenses. With the price of education on the rise, it would be wise to consider investing in a qualified tuition program today for the benefit of both your children and your pocket book tomorrow.

Open Education Savings Accounts. Contributions to education savings accounts do grow tax-free until the recipient withdraws money to pay for college. Withdrawals remain tax free if the money is used for qualified education expenses (i.e., tuition and fees).

Set up an IRA for Your Child. If your child has income from a part-time job, divert at least $3,000 of that money to an IRA for him or her. There isn't a minimum age for opening an IRA, and it's a good way to teach your child about saving for the future.

Consider a Uniform Gift to Minors Act (UGMA) Account. UGMA accounts are a type of savings account that provide some unique benefits and protections and are a convenient way to save for your child's future. The primary advantage is that any earnings on the account are taxable to your child (at his or her tax rate if the child is at least 14 years old), rather than to you.

Visit our web site at www.turbotax.com for information about tax law changes.

PLEASE FEEL FREE TO PRINT ANY OF THE ABOVE INFORMATION FOR EDITORIAL PURPOSES.

For more information or to schedule an interview with Fred Grant contact: Colleen Ferrin at 858-525-7487 or email at colleen_ferrin@intuit.com.