It involves adjusted qualified education expenses (AQEE), an exclusion phase-out, compound interest and American Samoa.
FORBES: Paying For College: A Tax Dodge For College Students
Payments for other expenses, including room and board and living expenses stipends, are not considered qualified education expenses.
You calculate the deduction based on qualified education expenses you pay for yourself, your spouse, or a dependent.
Tax Benefits: The earnings grow tax-free if used for qualified education expenses.
According to IRS Publication 970, qualified education expenses are tuition and related expenses required for enrollment or attendance at an eligible educational institution.
If the distribution equals the total of qualified education expenses, then none of the amounts in boxes 1-3 need to be reported on your tax return.
If the distribution exceeds the total of qualified education expenses, then the earnings (box 2) will be reported on your income tax return at line 21.
Qualified education expenses do not include room and board, travel, research, clerical help, or equipment and other expenses that are not required for enrollment in or attendance at the instituion.
It is an investment bucket of mutual funds you own that receives tax privilege similar to that of an IRA. You contribute after-tax dollars to the plan, and the principal and growth can be distributed tax-free if used for a wide range of qualified education expenses.
If you are the owner of a qualified tuition program (QTP) (like a section 529 plan or a Coverdell ESA), you should receive a federal form 1099-Q, Payments from Qualified Education Programs, when funds are withdrawn in order to pay qualified education expenses of the beneficiary.
For purposes of the tuition and fees deduction, qualified education expenses are tuition (clearly) and related expenses required for enrollment or attendance at an eligible educational institution (any college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education).
应用推荐