College student can’t pass Calculus III without hiring a private tutor - does the expense qualify as a qualified educational expense (QEE)? Would it be a permissible expense for purposes of a 529 withdrawal?
And what about the student’s computer - I know that didn’t use to qualify as a QEE. Has there been any change? What about the cost of the computer as a withdrawal from a 529 account?
Unless the cost of the tutor is being paid to an eligible educational institution – not a 529 qualified expense.
From IRS Pub. 970’s list of QEE:
The purchase of computer or peripheral equipment, computer software, or Internet access and related services if it is to be used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible educational institution. (This does not include expenses for computer software for sports, games, or hobbies unless the software is predominantly educational in nature.)
So, if I’ve understood correctly . . .
Private tutoring service - NOT a QEE for tax purposes and NOT a 529 qualified expense
Computer - YES as a QEE for tax purposes and YES as a 529 qualified expense
I was answering in relation to 529 QEE only. Are you also asking if these expenses are somehow tax deductible? What do you mean by “for tax purposes”?
Qualified Education Expense: those expenses NOT paid directly to a university that may nonetheless be treated as college expenses for purposes of calculating a student’s tax liability for scholarship income.
Tuition & fees + QEE = nontaxable portion of scholarship
For example, room & board are not QEE, but textbooks and required lab supplies are QEE.
So, back to my original question: computer and private tutoring - QEE or not?
There are multiple IRS definitions of QEE depending on which particular tax incentive or program you are talking about.
Are you getting that definition of QEE in yout post #4 from an IRS source? If you can provide a link to the source, we can get on the same page.
Well, let’s keep this simple, then . . . would private tutoring be a qualified expense under ANY of the programs you’re thinking of?
No, I don’t think so.
It is not required for attendance at the educational institution.
Mandatory fees are usually QEE for purpose of tax free treatment of scholarships or claiming education credit (AOTC), but even there exist exceptions, for example health fee and transportation fee.
Neither qualify as QEE for tax purposes.
“Tax purposes” is a bit broad. As I mention above, a computer purchase can be QEE for 529 distributions, meaning that the earnings portion of the distribution will not be subject to income tax (or the 10% penalty for a non-qualified distribution).
Computer qualifies as qualified expense for 529
https://www.irs.gov/publications/p970/ch08.html#en_US_2015_publink1000178525
Refer to publication 970
Also unless the rules have changed (read p970), a computer is a QEE for the AOTC IF is required in order to attend the school. Some school require all students to have a computer in order to attend.
Both of my kids have had to purchase ‘codes’ for textbooks to take exams online. I don’t see how this isn’t ‘requiring’ ad computer for college.
@twoinanddone if the school requires you to purchase a code, but they provide a computer lab where you can access a computer without a charge, 24/7 during the school year, they are not requiring you to purchase a computer, so it would not be tax deductible as a QEE for the AOTC