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Discussion:Qualified Higher Education Expenses

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Discussion Forum Index --> Advanced Tax Questions --> Qualified Higher Education Expenses


Discussion Forum Index --> Tax Questions --> Qualified Higher Education Expenses

S3 (talk|edits) said:

24 November 2009
Let's try that again.

I have a client who has a 401K from a PREVIOUS employer. If he rolled the 401K over into an IRA and then took a distribution for education expenses would that qualify for the exception to the penalty?? I'm thinking it would but just want confirmation since a 401K hardship distribution would not.

JasmineCPA (talk|edits) said:

24 November 2009
IRA- Can withdraw for qualified higher education expenses of owner, children, and grandchildren

R2 (talk|edits) said:

25 November 2009
Assuming the client separated from service, this would be an eligible rollover.

Umk395 (talk|edits) said:

27 November 2009
Yes -- excluded from 10% penalty. Don't forget you can also include books, fees, etc for purposes of expenses that would be excluded from the 10% penalty.

KathiJud (talk|edits) said:

27 November 2009
And they have now added computers and related expenses to qualified items.

Cotopop (talk|edits) said:

29 November 2009
It was my understanding that the purchase of computers was a qualified education exoense for 529 Plan distributions but not for the new American Opportinity credit (replaces Hope credit )

KathiJud (talk|edits) said:

29 November 2009
Q4. What education expenses qualify for the American opportunity tax credit?

A. The term "qualified tuition and related expenses" has been expanded to include expenditures for "course materials." For this purpose, the term "course materials" means books, supplies and equipment needed for a course of study whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance.

Q5. Does an expenditure for a computer qualify for the American opportunity tax credit?

A. Whether an expenditure for a computer qualifies for the credit depends on the facts. An expenditure for a computer would qualify for the credit if the computer is needed for enrollment or attendance at the educational institution.

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