Concerns have been raised that individuals could allow the account to grow indefinitely on a tax-deferred basis before requesting reimbursement or use distributions in earlier years to pay QHEEs in later years. Section 529 is silent regarding whether distributions must be made from a section 529 account in the same tax year as QHEEs were paid or incurred. In a 2008 Proposed IRS Guidance, the Treasury Department wrote: Unfortunately, there is no correct answer to this question. One of the most frequently asked questions regarding 529 plans is:Ĭan I reimburse myself for last year’s qualified expenses from my 529 plan this year? For the most accurate list, you can review the qualified tuition program (QTP) section of IRS Publication 970. Qualified education expenses include college tuition and fees books, supplies, and equipment expenses for special needs services as required by a special needs beneficiary expenses for room and board, so long as the student is enrolled at least half-time the purchase of a computer, peripheral equipment, software, internet access, and “related services ” as well as lower school education tuition. Then, distributions to reimburse for any qualified education expenses are distributed both state and federal tax-free. Thanks to the 2018 Tax Cuts and Jobs Act, you can now also reimburse yourself up to $10,000 for elementary or secondary school tuition.Ĭontributions to a Virginia 529 plan offer the account owner a Virginia state tax deduction. 529 plans are typically the best vehicle to save for college. 529 plans, or Qualified Tuition Programs as the federal government calls them, are specialized investment accounts to give tax-advantaged savings for education expenses.

Irs qualified education expenses 529