Flight lessons

[Timbo7]

...

[ToddL99]

Please clarify - what college or university is your son attending?

[Timbo7]

It's a FAFSA-listed University that has an Aviation program.

[ToddL99]

In my opinion, the cost for a private pilot's license (or instrument-rating) is a qualified education expense if obtaining the certificate is part of the published curriculum for his degree from an eligible educational institution and the degree is not exclusively for the purpose of obtaining a flying job (e.g. Aviation Management, Aviation Safety).

The key distinction here is whether he is deducting the cost of flight training as a business-related expense (subject to many interpretations)  or claiming those costs as a qualified education expense (required for a degree).

It gets a bit muddier if they require him to obtain a commercial pilot's license since that would qualify him for a new career. Expenses incurred to qualify for a new trade or business are not deductible.

As an ATP (type-rated in B737) I wanted to do a bit more research to support my response, hence my request for the name of the school. The issue is subject to numerous interpretations and they are all dependent on circumstances.

See the following posts to gain a better understanding of the complexity of this issue (search "IRS flight training" for more):.

FLIGHT TRAINING EXPENSES - CASES AND RULINGS

Pay for flight lessons with 529 fund?

TAX DEDUCTIBILITY OF FLIGHT TRAINING

[Timbo7]

{deleted}

[ColeenD3]

This is the key part of ToddL99's answer.

In my opinion, the cost for a private pilot's license (or instrument-rating) is a qualified education expense if obtaining the certificate is part of the published curriculum for his degree from an eligible educational institution.

The IRS has provisions for work-related education is the reason for the rest of the answer.

[Timbo7]

Not sure this makes sense.  If you are a Mechanical Engineer, you cannot use your 529 funds if you get a Mechanical Engineering job?  So, no one who gets an Aviation degree and gets an aviation job should be using their 529 funds either? 

[Timbo7]

He is required to obtain a Commercial license as part of his BS in Aviation Sciences degree. Still, he may not become a commercial pilot.  He is interested in FAA and other aero jobs.  Just a requirement of the degree. 

[Timbo7]

Ok, so maybe he can obtain his PPL and instrument rating using 529 funds, but the rest up to Commercial won't qualify as a QEE?

[DawnC · Accepted solution]

Right, only expenses required to obtain the degree count as ''qualified education expenses''.    If it is required for the degree, it is a qualified education expense.  Some examples of expenses that arise when taking the American Opportunity Credit or the Lifetime Learning Credit are as follows:  

You can deduct: 

• Tuition
• Enrollment fees
• Expenses paid to the school, on condition of enrollment (lab fees, for example)
• Certain books, supplies, and course-related equipment - if required for the course or degree
• Expenses listed above (for the following semester), as long as the semester begins in the first three months of 2021
• Education expenses paid with cash, checks, credit cards, and savings accounts
• Education expenses paid with loans, gifts, and inheritances

You can't deduct:

• Room and board - 529 funds can be used - up to the school's Cost of Attendance (COA) for the academic period.  Each school publishes its own costs.  
• Fees for non-degree courses (sports, games, or hobbies), except when the course or activity is part of the student’s degree program.  For the Lifetime Learning Credit only, these expenses qualify if the course helps the student acquire or improve job skills.
• Insurance
• Medical expenses or student fees
• Transportation or mileage
• Fees for maintaining or acquiring a license (broker, CPA, etc.) 
• Undergraduate and graduate application fees

If the 1099-Q distribution doesn’t exceed the amount of the student's qualifying expenses, then you don't have to report any of the distribution as income on your tax return. If the distribution exceeds these expenses, then you must report the earnings on the excess as "other income" on your tax return.   When you pay a student’s school expenses with these funds, you cannot claim a tuition deduction or either of the educational tax credits for the same expense.