Taxpayer has QTP for $15,058. $58.00 is the earnings. They actually spent $6,000 on tuition and books. They used $5,500 to purchase a car for the daughter to have transportation to school. Can they still use the Hope credit for the tuition? They were also told by the investment broker the car purchase would classify as education expense because it is used for transportation to school. Everything I have read says only tuition, books and board and room can be used.
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Qtp
Yes, tuition qualifies for Hope credit, and yes, books, room & board are qualified expenses for the QTP distribution. Reference pub 970 & TTB pp. 12-4&5. Transportation is a qualified expense only for an ESA distribution -
Education Deduction
I know that tuition is the only item that qualifies for the Hope Credit. What I was asking is if they could take the Hope Credit since they did not use all of the distribution from the Qualified Tuition Plan for the tuition costs.
Thanks again for your help.Comment
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Many issues
First, they have to pay a penalty on the $9,058 not used for tuition, room and Board.
Page 12-5 in TTB seems to say that they can claim the tution and fees deduction or the Hope or Lifetime Credits. If they claim one of the credits some of the $58 will be taxable.Comment
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Education Deduction
Just want to say thanks for your help. I appreciate it.
LindaComment
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