Qualified Higher Education Expense

Tuition and related expenses that one pays to a university, college, technical school, or other post-secondary institution. Most of the time, qualified higher education expenses are tax deductible, and one may also be able to deduct the interest on savings bonds if the proceeds are used to pay for these expenses. See also: 529.

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References in periodicals archive

* If a beneficiary receives distributions from both a Coverdell account and a qualified tuition program in the same year and the total distributions from both are more than the beneficiary's adjusted qualified higher education expenses, those expenses must be allocated between the two distributions to determine how much of each distribution is taxable.

Current U.S. tax incentives for higher education expenses

(39) Fifth, a program must contain adequate safeguards to prevent contributions on behalf of a beneficiary in excess of those reasonably necessary to provide for the qualified higher education expenses of the beneficiary.

A primer: Section 529 plans, Coverdell Education Savings Accounts (Education IRAs), and other tax-smart ways to save for college

To be eligible for this tax treatment, withdrawals may be used to pay qualified higher education expenses only: tuition, fees, books, supplies, equipment and room and board under certain circumstances.

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There is no penalty for early withdrawal of IRA funds for first-time homebuyers and qualified higher education expenses incurred by the IRA owner, spouse, child or grandchild of the owner or spouse.

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Investments in so-called "529 college savings plans" can be used for qualified higher education expenses including tuition, room, board and textbooks.

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Current law states that Section 529 distributions that ate used to pay qualified higher education expenses are exempt from federal income tax.

IRS moves to clarify rules on tuition savings plans

* used for qualified higher education expenses incurred by the IRA holder or an immediate family member

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