Section 529 Distribution

[Uncle Sam]

Section 529 Distribution

Thank you Bob W - that is just what I needed.

[veritas]

From what I have heard

every college requires a computer for it's students.

[BOB W]

I found this in google:

Regarding the laptop you purchased, keep your fingers crossed. If the computer is required for class or for attendance at the school, it can pass as a qualified withdrawal. But, as demonstrated in the tax court case of Gorski v. the Commissioner, buying a laptop to save your daughter from waiting in line at the computer lab will not pass muster. In our case we are fortunate since NCArts considers a computer loaded with film editing software a requirement for attendance.

http://mensnewsdaily.com/2006/09/02/qualified-529-spending/

And this:

http://www.ustaxcourt.gov/InOpHistoric/gorski.sum.WPD.pdf

The disputed $2,684.30 is made up
of the following expenses: (1) $1,585 for a computer; (2) $400
for books; (3) $504.12 for housewares, appliances, and furniture;
and (4) $195.18 for bedding.

Respondent agrees that the expenses for the computer,
housewares, appliances, furniture, and bedding were incurred and
paid in 2001, but argues that they are not qualified higher
education expenses because they were not required by the
university. Respondent argues that the book expense was not
properly substantiated as having been incurred and paid in 2001
for books that were required for Kathleen’s enrollment in
classes.

[Uncle Sam]

Section 529 Distribution

TT 12-4 still doesn't answer the question.
Does the purchase of a computer that is NOT required by the college, but still aids the college student a qualified expenditure from a Sec 529 plan distribution?
The 2 column chart on the left doesn't state yes or no, and in the right column, it only states "equipment required for enrollment or attendance". Even if it's NOT required, but still it enhances the education process, will it qualify?

[veritas]

Qualified expenses

See page 12-4 in TTB.

[Uncle Sam]

Sam> Tuition Billed usually indicates Billed but unpaid. If you look at the bottom of the 1098-T there is usually a breakdown of the paid/unpaid.

In today's world a computer used in college seems to be common place. Some colleges require them and some include it in the tuition fee. For me, I would include it.

Where I'm confused this that a withdrawal was made and the 1098T shows only amounts BILLED. How come the PAID box is not filled in??????

I have no idea. The client told me the amount billed was what the tuition was, and the distribution paid for tuition and "other related items towards the education".
Perhaps showing money coming from the 529 does not qualify for showing "Paid", because client didn't pay it, the 529 did.

[BOB W]

Sam> Tuition Billed usually indicates Billed but unpaid. If you look at the bottom of the 1098-T there is usually a breakdown of the paid/unpaid.

In today's world a computer used in college seems to be common place. Some colleges require them and some include it in the tuition fee. For me, I would include it.

Where I'm confused this that a withdrawal was made and the 1098T shows only amounts BILLED. How come the PAID box is not filled in??????

[Uncle Sam]

A client shows me a 1099 for a Sec 529 distribution of $ 5750
The 1098-T, box 2 shows tuition billed for $ 3,642.
Client claims that $ 1400 of the difference was used to purchase a computer for his son to assist him in college education. The computer was NOT required by the college as part of the education program. I have to find out about the $ 708 difference.
How do I treat the excess distributions, and does the computer qualify as an educational expense? I looked at Sec 529 and it doesn't specify whether it is or isn't.