Many retirement accounts and college savings accounts have rules that allow for special tax treatment for withdrawals that are used for qualified higher education expenses.
Examples: 529 plans and ROTH IRAs allow you to grow funds tax-free if distributions are used for qualified higher education expenses. In addition, early IRA withdrawals (before age 59 1/2) used for qualified higher education expenses will be exempt from the 10% early withdrawal penalty tax, although the amount withdrawn would still be subject to ordinary income taxes.
If you want to head back to school, or help pay for a child or grandchild's education expenses, what type of expenses are eligible for this tax treatment?
The IRS website defines qualified higher education expenses as:
"tuition, fees, books, supplies, and equipment required for the enrollment or attendance of a student at an eligible educational institution. They also include expenses for special needs services incurred by or for special needs students in connection with their enrollment or attendance. In addition, if the individual is at least a half-time student, room and board are qualified higher education expenses."
Many schools or programs now require laptops or computers. If so, that expense would count as "equipment required for the enrollment or attendance of a student".
Make sure to keep any list of required equipment that the school provides, and any requirements provided in the class syllabus. And of course you'll want to keep receipts so you can show how much you paid for what.
Also Known As: higher education expenses, qualified education expenses