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Families using a tax-advantaged 529 college savings plan to pay for college may now count the purchase of a computer for a beneficiary college student as a qualified education expense.
Account owners of tax-advantaged 529 college savings plans will be able to count the purchase of a computer for a beneficiary college student as a qualified education expense in 2009.
First and foremost, the taxpayer must be involved in a trade or business or employment situation where the education expense is required due to the necessary maintenance or enhancement of the individual's skills.
The PATH change is that a computer will qualify as a higher education expense for 529 Plan purposes.
Because the IRC section 162(a) deduction is related to trade or business expenses, taxpayers claiming an education expense deduction under this section should carry on a trade or business when the education is undertaken (Jungreis v.
These reimbursements are deductible if the education expense was incurred for maintaining or improving skills required in employment--but this is a below-line deduction, meaning that the employee must itemize and the deduction is subject to a "2-percent-floor" (i.
Tuition for primary or secondary school education is neither deductible as an education expense, nor as a charitable contribution.
The taxpayer has many choices, but may not claim more than one benefit for the same education expense.
Expenses for room and board incurred by students who are enrolled at least half-time are considered a qualified education expense.
Generally, only one tax benefit can be claimed for a particular education expense.
Withdrawals from a 529 plan are tax free to the extent they are used to pay the beneficiary's higher education expenses in the same calendar year.
A Coverdell Education Savings Account, originally called an "Education IRA," may be created for the purpose of paying the qualified education expenses of a designated beneficiary.

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