Dual Enrollment and qualfied eduation espenses for IRC 529 and AOC or LLC

[dlhdch]

My grandson is a junior in high school but attending full time college classes (12 hrs) at the local community college. This is his first semester.  He has tuition expenses of $1890, scholarships of $567, and related waivers of $953; netting to $370 due. A number of other charges are listed for books, tuition, mandatory fees, etc., but they are all waived.

Tuition is obviously required for his attendance in classes at the college.

Questions arise as to the eligibilty of the tuition as a qualifying educatiion epense for 529 purposes. A questions also arise as to whether room and board expenses up to the Cost  of Attendance for a student living with parents would qualify.

Similarly, questions arise as to the eligibility of such costs for the American Opportunity Credit (AOC) and Lifetime Learning Credit (LLC).

Any guidance would be appreciated.

[Bsch4477]

A 529 plan may be used to pay for dual enrollment tuition and fees, but a 529 plan cannot be used to pay for books, supplies, room and board or other dual enrollment expenses. The parent would be able to claim Lifetime Learning Credit for unreimbursed tuition. 

[Hal_Al]

He would have to be enrolled as a degree candidate* to be eligible for the AOC.  A student (or his parents) are limited to claiming the AOC four times in his undergrad career.  You only have $370 of adjusted qualified expenses. That will get the parents a $370 AOC.  You may want to save the AOC for later, when it could be worth up to $2500 each year (on the other hand he may finish in four years).

If he is an officially enrolled college student, I'm of the opinion room & board is a qualified expense for a 529 distribution (up to the cost of attendance allowance for students living at home). The cost of a "required" computer is also a qualified expense for a 529 distribution or the AOC (but usually not the LLC). 

*The ability of the parent of a high school student to claim the education credit is limited.  If these courses are provided by an eligible college, this cost qualifies for the Lifetime Learning Credit (LLC). The school must have policy of granting college credit for that course, already taken, if the student ever enrolls there. In other words, it is a requirement that the course be a college credit course, even if the student isn't currently a college student. It’s not that the student is post-secondary, it’s that the course is post secondary. Books are not a qualifying expense, unless included in the course fee. You must have paid tuition to the college and not the high school in order to claim the expenses on your return.

https://www.taxact.com/support/22177/2023/education-credits-high-school-student-taking-college-class...

High school students are not usually eligible for the more generous American Opportunity Credit, unless they are officially enrolled as a degree candidate.  From pub 970: "Example 3. During the 2022 fall semester, Larry was a high school student who took classes on a half-time basis at College X. Larry wasn't enrolled as part of a degree program at College X because College X only admits students to a degree program if they have a high school diploma or equivalent. Because Larry wasn't enrolled in a degree program at College X during 2023, Larry wasn't an eligible student for tax year 2023."  Reference: https://www.irs.gov/publications/p970/ch02.html