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Level 1

Solved

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

Forum|Forum|7 years ago
June 7, 2019
1 reply
4 views

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?

TurboTax Deluxe Online

Best answer by MargaretL

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.

MargaretLAnswer

Level 12

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 2

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.