For 2012, computer technology or equipment, or Internet access or related services, may be qualified expenses.ĭistributions in excess of qualified expenses are taxed to the beneficiary to the extent that they represent earnings on the account. Reasonable room and board is also a qualified expense if the student is enrolled at least half-time. These include tuition, fees, books, supplies, and required equipment. You can change the beneficiary or roll over the funds in the program to another plan for the same or a different beneficiary without income tax consequences.ĭistributions from the program are tax-free if they don't exceed the student's qualified higher education expenses. You don't get a federal income tax deduction for the contribution, but the earnings on the account aren't taxed while the funds are in the program.
There are two types of programs: prepaid plans, which allow you to buy tuition credits or certificates at present tuition rates, even though the beneficiary (child) won't be starting college for some time and savings plans, which depend on the investment performance of the fund(s) you place your contributions in.
529 qualified expenses code#
If you have a child (or a grandchild) who is going to attend college in the future, you have probably heard about qualified tuition programs, also known as 529 plans (for the Internal Revenue Code section that provides for them), which allow prepayment of higher education costs on a tax-favored basis.
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