AOC---Computer------what would you do?

[FEDUKE404]

Well, not exactly

So, if a student is taking an online course, you feel a computer may not be a requirement? How can he take the course without it?



Health insurance fees are disallowed by statute.
(C) Exception for nonacademic fees Such term does not include student activity fees, athletic fees, insurance expenses, or other expenses unrelated to an individual’s academic course of instruction.

http://www.law.cornell.edu/uscode/text/26/25A

Thanks,
Mike

Dude, the health insurance was only a (poor) example of the logic behind the inherent issue here of "necessary" versus "required."

Based on the logic expressed here, virtually every college student should just go out and buy a new top-of-the line computer at time of matriculation, and then write it off on his/her taxes, because it is "required." Color me wrong if you wish, but I just don't think that is the underlying intent of the law.

(OK...here's another example...I'll try better): When computers were first appearing for use of the masses, many employees wanted to deduct their own very expensive computers as business expenses to "help them in their job" or whatever. At some point the IRS said "wait a minute!" and then added a similar phrase for employees/computers that a computer could only be an employee business deduction if the employer required them to purchase a computer as a part of employment. (I believe the exact verbiage is now along the lines of "for the convenience of the employer and required as a condition of employment.") Sound familiar? And then there were those folks who were "on call" and wanted to write off a portion of their telephone costs (this is pre-cell phone days). Many/most people did it...but the IRS finally said no one (brain surgeon or janitor), under any circumstances, could claim any portion of the regular monthly service fees for the first telephone line into the house. That quickly put an end to those deductions. I expect at some point a similar restriction on "business" cell phone usage.

And so it goes. I've got too much work to do these days to beat this matter to a further pulp. I'll check in to see what other TTB readers may add.

FE

[oceanlovin'ea]

My thoughts

First of all, if she is taking online college courses, she would need a computer to do her work. You can't do that without a computer. If she is going to a local college, it would depend on many of the facts stated before.

Second, the credit card company can give her a copy of the receipt.

Linda, EA

[DexEA]

Interesting about the computer - so I googled - maybe each of us need to google our clients college to determine

Example: Univ of Fla - had a statement

Computer Requirement
College and Degree Program Requirements/Recommendations
Access to and ongoing use of a computer will be required for all students to complete their degree programs. The university expects each student entering the university and continuing students to acquire computer hardware and software appropriate to the degree program. Competency in the basic use of a computer is a requirement for graduation. Class assignments may require use of a computer, and academic advising and registration can be completed by computer. In addition, official university correspondence is sent via e-mail.

Example: Univ of Phoenix also requires a computer

and the list goes on

A student at the local community college not meeting half-time requirements - only taking a few courses - I would say no to the Laptop or Computer cost - but enrolled as full-time - something to consider depending on the classes and what the College requirements are.

Sandy

"Access to and ongoing use of a computer will be required for all students to complete......."

This has always been my personal conflict, yes a computer is required, however usually the school has computer labs, the local library has access, and I'm sure you can find other public access. So, is the purchase of the computer a requirement? This year many clients want to write off the cost of the internet. Although it is required for the communications and on-line classes/projects, public WiFi is everywhere these days. So, is the payment for the internet access for the months of school a required qualified expense?

To this point I have said no, no, no, not a qualified expense. This year I am re-thinking, maybe it is a qualified expense?

[Gary2]

Based on the logic expressed here, virtually every college student should just go out and buy a new top-of-the line computer at time of matriculation, and then write it off on his/her taxes, because it is "required." Color me wrong if you wish, but I just don't think that is the underlying intent of the law.

The law imposes no limit on the quality or price of the computer, so long as it inherently meets the "required" criterion. A high end desktop or notebook Mac would likely qualify - and seems consistent with the intent of the law; a supercomputer, or a machine-room rack with multiple units, each running quad-core processors wouldn't. Perhaps a better question is whether an iPad would qualify, since it may or may not meet the intent of the school's requirement.

But is this really relevant? The AOC caps at $4K in expenses - many students will hit this cap on tuition alone. The LLC requires that the equipment be purchased from the school, which would rule out most computer purchases. It also has a $10K per return limit on expenses, which is harder to hit for one student, but not uncommon.

[DexEA]

But is this really relevant? The AOC caps at $4K in expenses - many students will hit this cap on tuition alone. The LLC requires that the equipment be purchased from the school, which would rule out most computer purchases. It also has a $10K per return limit on expenses, which is harder to hit for one student, but not uncommon.

It is like a sigh of relief when the $4,000 cap kicks in, however, I find it relevant when the student qualifies for the AOC and has scholarships/grants that cover the majority of the tuition or when the student attends a lower cost technical institute in the area to take some of the basic classes with the intent to transfer to a University in the next year or two - both of these scenarios actually happen quite often.

[Roberts]

This has always been my personal conflict, yes a computer is required, however usually the school has computer labs, the local library has access, and I'm sure you can find other public access.

When a student says it is a course requirement to read Moby ****, do you deny them the deduction for buying the book because they could have gotten their copy from the library?

[ddoshan]

No time to search now but in the AOTC questions and answers I believe it states something like ... Even if a student is recommended to have a computer for coursework, it is not a qualified expense unless it is included as part of tuition and fees as required course materials. If the computer is not included as as part of the tuition and fees the cost of the computer is not considered as a qualified education expense for AOC purposes.

Note some confusion comes in whereas such expense can be taken into consideration in some education savings accounts.

I don't think the U of Florida example passes the test. Unless a purchase of a computer is a condition of enrollment and included as part of the tuition and fees as required course materials.
I suspect I can still enroll at the U of Florida without purchasing a laptop.

[DexEA]

When a student says it is a course requirement to read Moby ****, do you deny them the deduction for buying the book because they could have gotten their copy from the library?

I think there would be a huge difference between buying a copy of Moby**** and the purchase of a computer, but it would depend on how it is stated as the course requirement. If access to and ongoing use of Moby**** is the requirement, yes, I probably would deny the deduction, I don't think it would be the end of the world as I bet you could pick up a copy at a reasonable price. However if it states books required include a copy of Moby****, I would allow the deduction.

[Gary2]

No time to search now but in the AOTC questions and answers I believe it states something like ... Even if a student is recommended to have a computer for coursework, it is not a qualified expense unless it is included as part of tuition and fees as required course materials. If the computer is not included as as part of the tuition and fees the cost of the computer is not considered as a qualified education expense for AOC purposes.

LLC requires that qualifying expenses be paid to the institution. AOC does not require that expenses for books, supplies, or equipment be paid to the institution; they may be purchased anywhere. At least for 2011 - the 2012 Pub. 970 isn't available yet.

[Super Mom]

From what I understand you can purchase a computer from a state 529 plan. Isn't that like saying if it qualifies for a Medical Reimbursement, it qualifies for Sched A? So wouldn't this work the same way?

[taxea]

See Pub 17 pg 227 under education expenses. It does have to be required "course material".

[BP.]

From what I understand you can purchase a computer from a state 529 plan. Isn't that like saying if it qualifies for a Medical Reimbursement, it qualifies for Sched A? So wouldn't this work the same way?

Not analogous. Room & board are qualified expenses from a 529 plan, but do not qualify for an education credit.

[dtlee]

This list was started several years ago to provide a quick overview of institutions with some sort of notebook or laptop computer initiative.

http://www2.westminster-mo.edu/wc_users/homepages/staff/brownr/NotebookList.html

Last update Jan 2013

Mike

Mike,

I know that sheet moved and that it continues to be updated. I would post the new link but am concerned about the policies here since they never answered my specific question about free sites who offer information about taxes (like the IRS). The old link does link to the new site.

Can you share any other information about it, like who maintains it and whether its purpose is to document requirements for a purchase of a computer for the credits?

Next year, we will be required to follow some level of Due Diligence for the American Opportunity Credit and I am trying to get my ducks in a row.

Thanks.

[mactoolsix]

Mike,

I know that sheet moved and that it continues to be updated. I would post the new link but am concerned about the policies here since they never answered my specific question about free sites who offer information about taxes (like the IRS). The old link does link to the new site.

Can you share any other information about it, like who maintains it and whether its purpose is to document requirements for a purchase of a computer for the credits?

Next year, we will be required to follow some level of Due Diligence for the American Opportunity Credit and I am trying to get my ducks in a row.

Thanks.

Doug - I have no update about this site. Sure would be nice if there was check box on the 1098-T "computer required" but then maybe I'm hoping for too much!
Mike

[dtlee]

Doug - I have no update about this site. Sure would be nice if there was check box on the 1098-T "computer required" but then maybe I'm hoping for too much!
Mike

Thanks, Mike.

He has updated the list as recently as this month.

I agree that it would be nice if the school were required to officially take a stance. I also wish that the IRS and the law were more clear about when this is allowed. The IRS, for example, seems to think a computer is only allowed if required for attendance or enrollment, whereas many schools seem to allow specific majors to determine this. The IRS seems to allow "equipment required for a course of study" but somehow they don't think a computer is included in "equipment" which seems rather odd. I have not seen the word "equipment" in the law, so perhaps the IRS has some liberties in their interpretation.

With Due Diligence requirements coming next year, I want to try to understand what rules I am supposed to be following.