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Level 1

What qualifies as higher education to avoid 10% early withdrawal penalty from my IRA

I took money from my IRA to pay off some debt. My wife is currently in school and we are using student loans to pay for school. Can I use the cost of her tuition for high education deduction to lower the amount I have to pay the 10% penalty on?
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Employee Tax Expert

What qualifies as higher education to avoid 10% early withdrawal penalty from my IRA

Yes, you can use the cost of the tuition.  For the purposes of the 10% additional penalty exception, higher education means costs of tuition, fees, books, supplies and equipment to a post secondary school (college, university, vocational schools) eligible to participate in a student aid program administered by the U.S. Department of Education.  It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) post secondary institutions. 

Note: living expenses are not allowed for the additional 10% penalty tax exceptions on early distributions.  

 

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Highlighted
Employee Tax Expert

What qualifies as higher education to avoid 10% early withdrawal penalty from my IRA

Yes, you can use the cost of the tuition.  For the purposes of the 10% additional penalty exception, higher education means costs of tuition, fees, books, supplies and equipment to a post secondary school (college, university, vocational schools) eligible to participate in a student aid program administered by the U.S. Department of Education.  It includes virtually all accredited public, nonprofit, and proprietary (privately owned profit-making) post secondary institutions. 

Note: living expenses are not allowed for the additional 10% penalty tax exceptions on early distributions.  

 

Level 1

What qualifies as higher education to avoid 10% early withdrawal penalty from my IRA

The Note is incorrect. According to the IRS room and board are allowed without penalty as long as the student is at least a half time student.
Level 1

What qualifies as higher education to avoid 10% early withdrawal penalty from my IRA

is this still correct for 2018? Also what if the student gets off campus housing?
Level 3

What qualifies as higher education to avoid 10% early withdrawal penalty from my IRA

Yes, that's what Publication 970 says for 2018.   It says you are allowed up to the "customary rate" for your university.  Just really didn't know how to document when filing online.
Level 1

What qualifies as higher education to avoid 10% early withdrawal penalty from my IRA

Fees, books, supplies, equipment, etc. must be required for enrollment.  Also, computers, software, and internet might qualify as higher education expenses for purposes of the 10% penalty exception.