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New Member
posted Apr 17, 2023 1:17:56 AM

What is qualified education savings? what all can I include as education expenses?

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2 Best answers
Expert Alumni
Apr 18, 2023 4:20:09 PM

Did you receive a 1098-T from your school?  In the Education section (under Deductions & Credits), you designate yourself as the Student, enter info about your school, and enter your 1098-T.  If your Box 1 is larger than your Box 5, you will automatically qualify for an Education Credit.   Your Scholarships are applied towards your Tuition expense, and the balance is then eligible for a credit. 

 

If your Box 5 is larger than your Box 1, on the following screen enter Books, Computers, and other Expenses.  

 

At the Education Summary page, click on Scholarships. You will then get a question as to whether any of your Scholarship Income was  not used to pay 2022 Expenses.  Say YES and you will get a screen where you can indicate that Scholarship was used to pay for Room & Board.

 

Here's more info on How to Enter a 1098-T and Qualified Education Expenses.

 

@mikedavis_29 

 

 

 

 

 

 

 

 

 

 

 

 

 

Expert Alumni
Apr 18, 2023 7:55:57 PM

Correct.  Qualified Education Expenses for Education Credits

 

Qualified expenses are amounts paid for tuition, fees and other related expense for an eligible student that are required for enrollment or attendance at an eligible educational institution. You must pay the expenses for an academic period* that starts during the tax year or the first three months of the next tax year.

 

Eligible expenses also include student activity fees you are required to pay to enroll or attend the school. For example, an activity fee that all students are required to pay to fund all on-campus student organizations and activities.

 

For AOTC only, expenses for books, supplies and equipment the student needs for a course of study are included in qualified education expenses even if it is not paid to the school. For example, the cost of a required course book bought from an off-campus bookstore is a qualified education expense.

12 Replies
Level 15
Apr 17, 2023 4:32:19 AM

"Qualified education savings" is just an informal term for Qualified Tuition Plans (QTP), the most common being the 529 Plans and the Educational Savings Account (ESA or Coverdell ESA). If you have such a plan, those terms are usually in the account name. 

 

Q. What all can I include as education expenses?

Tuition and fees

Yes, up to the full amount of college or vocational school tuition and required fees. Limited to $10,000 per year for K-12.

Books and supplies

For college expenses only

Computers, software and internet access

For college expenses only

For college expenses only, if the student is enrolled at least half-time

Special needs equipment

For college expenses only

No, costs associated with transportation to and from campus, such as airfare or gas, are not qualified education expenses

No, even health insurance policies offered by a school are not considered qualified expenses

No

Extracurricular activity fees

No

Yes, with a lifetime limit of $10,000

New Member
Apr 18, 2023 1:31:00 PM

Can i use college tuition as an expense even if i have scholarships that pay for it? And for school I moved away from my family and pay my own rent to go to school, can I use my rent bills as room and board?

Expert Alumni
Apr 18, 2023 1:53:24 PM

1. Probably

If your parents are claiming you, they claim the education credit. If you are paying your own way, then you may be able to claim the credit.

If your scholarship is earmarked for tuition only, then it can't be moved about. Most scholarships are not and you can claim they went towards room and board so that you can claim the $4,000 scholarship income needed to get the full education credit and the full education credit.

 

See more here.

For variations and references, please look at another of my answers for help. 

 

2. Room and board expenses off campus are limited by what the college publishes for off campus living.

See Pub 970

New Member
Apr 18, 2023 3:38:40 PM

My parents don't claim me. But your answers still confuse me on what I can input to my taxes

 

Expert Alumni
Apr 18, 2023 4:20:09 PM

Did you receive a 1098-T from your school?  In the Education section (under Deductions & Credits), you designate yourself as the Student, enter info about your school, and enter your 1098-T.  If your Box 1 is larger than your Box 5, you will automatically qualify for an Education Credit.   Your Scholarships are applied towards your Tuition expense, and the balance is then eligible for a credit. 

 

If your Box 5 is larger than your Box 1, on the following screen enter Books, Computers, and other Expenses.  

 

At the Education Summary page, click on Scholarships. You will then get a question as to whether any of your Scholarship Income was  not used to pay 2022 Expenses.  Say YES and you will get a screen where you can indicate that Scholarship was used to pay for Room & Board.

 

Here's more info on How to Enter a 1098-T and Qualified Education Expenses.

 

@mikedavis_29 

 

 

 

 

 

 

 

 

 

 

 

 

 

New Member
Apr 18, 2023 4:23:52 PM

Thank you so much! Just to clarify, rent for an apartment can be considered room and board or no?

 

Expert Alumni
Apr 18, 2023 4:39:01 PM

Yes, for educational expenses, room and board includes living off-campus. In either case, those expenses do not qualify for Education Credits, however. Qualifying expenses include Tuition, Fees and other related expenses. See this link,  Qualified Education Expenses for Education Credits: https://www.irs.gov/Individuals/Qualified-Ed-Expenses


Even if you pay the following expenses to enroll or attend the school, the following are not qualified education expenses: Room and board. Insurance. Medical expenses (including student health fees).


Room and board are NOT considered a qualifying education expense in the following situations: If you are claiming the American Opportunity Credit or Lifetime Learning Credit. For purposes of determining how much of your scholarship and fellowship income is tax free.


 

New Member
Apr 18, 2023 7:36:12 PM

Awesome, thank you so much. So just tuition and such books and equipment needed?

Expert Alumni
Apr 18, 2023 7:55:57 PM

Correct.  Qualified Education Expenses for Education Credits

 

Qualified expenses are amounts paid for tuition, fees and other related expense for an eligible student that are required for enrollment or attendance at an eligible educational institution. You must pay the expenses for an academic period* that starts during the tax year or the first three months of the next tax year.

 

Eligible expenses also include student activity fees you are required to pay to enroll or attend the school. For example, an activity fee that all students are required to pay to fund all on-campus student organizations and activities.

 

For AOTC only, expenses for books, supplies and equipment the student needs for a course of study are included in qualified education expenses even if it is not paid to the school. For example, the cost of a required course book bought from an off-campus bookstore is a qualified education expense.

Level 4
Aug 28, 2023 6:46:02 PM

Thank you for this listing, and the inclusion of the bit about a university's health care plan being non-deductible.

 

I discovered that, if one is in a pinch, one can use an early deduction from an IRA to pay health insurance premiums penalty-free.

 

Can you clarify or confirm that such a withdrawal could be used to pay the health insurance costs of a university plan for a dependent penalty-free? It seems that this could pass the "litmus test" for that exclusion.

Level 15
Aug 29, 2023 4:51:22 AM

@scotttiger - can you please post the link to the reference about medical premiums being "penalty free'? 

 

https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-tax-on-early-distributions

 

yes, there is an exception to the 10% penalty for IRA withdrawals if you are unemployed, but "in a pinch", which could occur while employed doesn't satisfy the requirement.  If the taxpayer is unemployed and has to pay the medical premium for their dependent, that appears to be acceptable.

 

And even if the 10% penalty is waived, the tax is not waived. 

 

Look at the 2nd line marked 'Medical" at the link above

Level 4
Aug 29, 2023 7:46:23 AM

Thanks. At the moment, I am unemployed. I should have written that, but this is a good refresher and clarification.