David Lerner Associates: Defining Qualified Education Expenses

David Lerner Associates: Defining Qualified Education Expenses

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The term "qualified education expenses" is utilized frequently in education circles, but it can mean numerous things depending upon the context. This table describes what the term implies in specific situations. (Note: The term "post-secondary education" includes graduate school unless otherwise noted.)


Qualified education expenses are...

529 college savings plan

529 prepaid tuition plan

Tuition, costs, books, supplies, equipment, and room and board for post-secondary education (college savings plans generally feature graduate school; prepaid tuition plans typically don't).

Room and board: qualified only if the student is registered at least half time (if student lives on campus, room and board is limited to the actual amount charged by the school; if student lives off campus or at home, room and board is restricted to the college's specific published room and board allowance figure).

Computers: qualified only if the college specifically needs one in order to enroll or attend.

Special needs services: qualified if sustained by a beneficiary with special needs if you want to enroll or attend.

Coverdell ESA

Elementary, secondary, and post-secondary education expenses, including tuition, fees, tutoring, books, supplies, room and board, uniforms, transportation, and related equipment.

Computers: qualified for students in elementary and secondary school, even if the school doesn't require it; aren't qualified at the post-secondary level unless the college requires one.

U.S. savings bonds

(to be eligible to exclude interest from federal income tax when bonds are redeemed)

Tuition and fees for post-secondary education (courses must be part of a degree or certificate program), and contributions to 529 plans (prepaid tuition plans or college savings plans) and Coverdell ESAs.

Room and board and books: not qualified education expenses.

American Opportunity credit

Lifetime Learning credit

Deduction for qualified higher education expenses

Tuition and related expenses only (American Opportunity credit can be utilized only for undergraduate costs; Lifetime Learning credit and deduction for qualified higher education expenses can be used for both undergraduate and graduate costs).

Course-related books, supplies, equipment, and student activities: for Lifetime Learning credit, qualified only if the fees should be paid to the college in order to enroll or attend, for American Opportunity credit, course materials are qualified even if not required by college.

Not qualified expenses (despite the fact that they must be paid to the college so as to enroll or attend): room and board, medical expenses (incorporating student health fees), insurance, transportation, and personal living expenses.

Student loan interest deduction

 Tuition, fees, room and board, books, equipment, and other necessary expenses, such as transportation, for post-secondary education.

For loan to be qualified: student must have been enrolled in a degree or certificate program on at least a half-time basis when the loan was obtained.



Material contained in this article is provided for information purposes only and is not intended to be used in connection with the evaluation of any investments offered by David Lerner Associates, Inc. This material does not constitute an offer or recommendation to buy or sell securities and should not be considered in connection with the purchase or sale of securities.

David Lerner Associates does not provide tax or legal advice. The information presented here is not specific to any individual's personal circumstances.

To the extent that this material concerns tax matters, it is not intended or written to be used, and cannot be used, by a taxpayer for the purpose of avoiding penalties that may be imposed by law. Each taxpayer should seek independent advice from a tax professional based on his or her individual circumstances.

These materials are provided for general information and educational purposes based upon publicly available information from sources believed to be reliable-- we cannot assure the accuracy or completeness of these materials. The information in these materials may change at any time and without notice.

Some of this material has been provided by Broadridge Investor Communications Solutions, Inc.




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Founded in 1976, David Lerner Associates is a privately-held broker/dealer with headquarters in Syosset, New York and branch offices in Westport, CT; Boca Raton, FL; Teaneck and Princeton, NJ; and White Plains, NY. For more information contact David Lerner Associates Cal 516-921-4200 Visit our website: http://www.davidlerner.com

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