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529 eligible expenses fees10/11/2023 Although labeled as a stu-ĭent activity fee, the fee is required for Kelly's enrollment and attendance at College X and is a qualified expense. No portion of the fee covers personal expenses. This activity fee is required ofĪll students, and is used solely to fund on-campus organizations and activities run by students, such as the student Now look at this example the IRS provides:įreshman year, she had to pay a separate student activity fee in addition to her tuition. Student activity fees are included in qualified education expenses only if the fees must be paid to the institution as a condition of enrollment or attendance. Qualified expenses must have incurred during an academic period when the student was enrolled in or accepted for enrollment in a program leading to a recognized academic credential.Not all fees, even "mandatory" fees, are 529 qualified expenses.įrom what I am reading on IRS publication 970 we should be able to claim the fee as it is required as a condition of attendance for my son's university. If the student lives off-campus, qualified room and board costs are limited to what is included in the college’s cost of attendance (COA) allowance for room and board for the period. Students can use a 529 plan to pay for room and board expenses, but only if they are enrolled in an eligible college on at least a half-time basis. Other non-qualified personal expenses include gym memberships, entertainment, dates and childcare. You may be able to use your child’s 529 plan savings to pay for fraternity or sorority housing costs (up to the college’s room and board allowance amount), but semester dues (sometimes more than $1,000) are considered a non-qualified expense. Clubs sports programs, such as rowing and field hockey, are usually the most expensive, with dues as high as $2,500 per year. Joining a sport, club fraternity or sorority also comes with additional costs that are not covered by your child’s 529 plan. Extracurricular activities and other miscellaneous expenses However, if health insurance or transportation costs are charged by the university as part of a comprehensive tuition fee, or the fee is identified as a fee that is “required for enrollment or attendance”, the expense may be considered a qualified 529 plan expense. Medical bills are also considered a non-qualified expense. The type of coverage available and price of the policy will vary depending on the college, but the average plan typically costs around $1,500- $2,500 per year. If your child is not covered by your family health insurance policy, you may be required to purchase health insurance through the college. These costs include average transportation expenses a student may incur while living on campus including gas, maintenance, bus fare and costs of traveling home for vacations and holidays. College admission application fees: $40 – $90 per application.ACT/ SAT: $47.50 – $67.00 per registration, additional costs for international students and late registration.College test prep: Varies, but popular programs range from $599 – $699.College-Level Examination Program (CLEP) exams: $85 per exam.This does not include application and testing fees, which could end up costing thousands of dollars depending on how many colleges the student applies to. Qualified expenses include those required for the 529 plan beneficiary’s enrollment or attendance at an eligible institution. Here are some common expenses that are not considered qualified for 529 plan purposes: College Application and Testing Fees These additional costs can be significant, so families may want to consider opening an additional savings account to complement their 529 plan. However, there are some expenses a college student or prospective student may incur that are not considered qualified. (Up to $10,000 per year can also be withdrawn tax-free to pay for K-12 tuition.) You can also make student loan payments with money from a 529 plan. This includes tuition, fees, books, supplies equipment, and, in some cases, room and board. Qualified 529 plan expenses include costs required for the enrollment or attendance at an eligible college or university. Non-qualified 529 distributions may also be subject to recapture if a state tax deduction was claimed. Distributions used to pay for some college expenses are considered non-qualified and may be subject to income tax and a 10 percent penalty on the earnings portion of the withdrawal. 529 plans are tax-advantaged accounts designed to save for college, but the tax benefits are only available when the funds are used to pay for qualified expenses.
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