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QHEEQualified Higher Education Expense
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3z) Qualified higher education expenses include tuition, fees, costs for books, supplies, and equipment required for the enrollment or attendance of the student at any "eligible educational institution," and amounts contributed to a qualified tuition program.
31) Under the prepaid tuition plan, a contributor purchases tuition credits or certificates on behalf of a designated beneficiary, which entitles the beneficiary to the waiver or payment of qualified higher education expenses.
Subject to certain limitations and phaseout rules, interest on qualified United States savings bonds may be excluded from gross income to the extent that the proceeds are used to pay qualified higher education expenses during the taxable year in which the redemption occurs.
IRA DISTRIBUTIONS WILL NOT BE PENALIZED if the funds are used to pay health insurance premiums for an unemployed taxpayer and his or her family, qualified higher education expenses for his or her family, or a first-time home purchase.
Distributions from education IRAs were not taxable as long as the funds were used for qualified higher education expenses.
Finally, adjusted qualified higher education expenses (AQHEE) are available.
If assets in the 529 plan are used for expenses that are not qualified higher education expenses, Susie generally must include the amount used to pay those expenses in her gross income, and a 10% penalty is assessed on that amount.
529 plans are tax-advantaged state savings programs in which the earnings on plan contributions are allowed to grow tax-free and plan distributions are not taxed to the extent they are used to pay qualified higher education expenses.
529 Plans can be used to help pay the costs of qualified higher education expenses at colleges nationwide.
Withdrawals from a 529 plan that are not used for qualified higher education expenses are subject to income tax plus a 10% penalty.
For 2009 and 2010, qualified higher education expenses also include the purchase of any computer technology or equipment or internet access and related services.
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