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IRS.gov Website
Publication 970
taxmap/pubs/p970-026.htm#en_us_publink1000178518

Chapter 8
Qualified Tuition Program (QTP)(p51)


What’s New(p51)

rule
taxmap/pubs/p970-026.htm#en_us_publink100011387
Qualified elementary and secondary education expenses.(p51)
For distributions made from qualified tuition programs (QTPs) after 2017, qualified education expenses may include no more than $10,000 paid for elementary or secondary school tuition incurred after 2017. See Qualified Elementary and Secondary Education Expenses.
taxmap/pubs/p970-026.htm#en_us_publink100011397
Rollovers to ABLE accounts.(p51)
An amount distributed from a QTP after December 22, 2017, isn’t taxable if it’s rolled over to an ABLE account for the benefit of the same beneficiary or for the benefit of a member of the beneficiary’s family (including the beneficiary’s spouse). But this doesn’t apply to the extent the amount distributed when added to other amounts contributed to the ABLE account exceeds the annual contribution limit. See Rollovers.

taxmap/pubs/p970-026.htm#en_us_publink1000273667Introduction

Qualified tuition programs (QTPs) are also called "529 plans."
States may establish and maintain programs that allow you to either prepay or contribute to an account for paying a student's qualified education expenses at a postsecondary institution. Eligible educational institutions may establish and maintain programs that allow you to prepay a student's qualified education expenses. If you prepay tuition, the student (designated beneficiary) will be entitled to a waiver or a payment of qualified education expenses. You can't deduct either payments or contributions to a QTP. For information on a specific QTP, you will need to contact the state agency or eligible educational institution that established and maintains it.
Deposit
This benefit applies not only to higher education expenses, but also to elementary and secondary education expenses.
taxmap/pubs/p970-026.htm#en_us_publink1000178521

What is the tax benefit of a QTP?(p51)

rule
No tax is due on a distribution from a QTP unless the amount distributed is greater than the beneficiary's adjusted qualified education expenses. See Are Distributions Taxable, later, for more information.
Deposit
Even if a QTP is used to finance a student's education, the student or the student's parents still may be eligible to claim the American opportunity credit or the lifetime learning credit. See Coordination With American Opportunity and Lifetime Learning Credits, later.
taxmap/pubs/p970-026.htm#en_us_publink1000178525

What Is a Qualified Tuition Program?(p51)

rule
A qualified tuition program is a program set up to allow you to either prepay or contribute to an account established for paying a student's qualified education expenses at an eligible educational institution. QTPs can be established and maintained by states (or agencies or instrumentalities of a state) and eligible educational institutions. The program must meet certain requirements. Your state government or the eligible educational institution in which you are interested can tell you whether or not they participate in a QTP.
taxmap/pubs/p970-026.htm#en_us_publink100077337

Qualified Education Expenses(p51)

rule
Generally, these are expenses required for the enrollment or attendance of the designated beneficiary at an eligible educational institution. For purposes of QTPs, the expenses can be either qualified higher education expenses or qualified elementary and secondary education expenses.
taxmap/pubs/p970-026.htm#designated-4ed22d9a

Designated beneficiary.(p51)

rule
The designated beneficiary is generally the student (or future student) for whom the QTP is intended to provide benefits. The designated beneficiary can be changed after participation in the QTP begins. If a state or local government or certain tax-exempt organizations purchase an interest in a QTP as part of a scholarship program, the designated beneficiary is the person who receives the interest as a scholarship.
taxmap/pubs/p970-026.htm#en_us_publink100077338

Eligible Educational Institution(p51)

rule
For purposes of a QTP, an eligible educational institution can be either an eligible postsecondary school or an eligible elementary or secondary school.
taxmap/pubs/p970-026.htm#eligiblepostsecondaryschool.aneligi-4ed24c43

Eligible postsecondary school.(p51)

rule
An eligible postsecondary school is generally any accredited public, nonprofit, or proprietary (privately owned profit-making) college, university, vocational school, or other postsecondary educational institution. Also, the institution must be eligible to participate in a student aid program administered by the U.S. Department of Education. Virtually all accredited postsecondary institutions meet this definition. The educational institution should be able to tell you if it’s an eligible educational institution.
An eligible educational institution also includes certain educational institutions located outside the United States that are eligible to participate in a student aid program administered by the U.S. Department of Education.
taxmap/pubs/p970-026.htm#hd4-1107-4ed25166

Eligible elementary or secondary school.(p51)

rule
An eligible elementary or secondary school is any public, private, or religious school that provides elementary or secondary education (kindergarten through grade 12), as determined under state law.
taxmap/pubs/p970-026.htm#en_us_publink100077339

Qualified Higher Education Expenses(p52)

rule
These are expenses related to enrollment or attendance at an eligible postsecondary school. As shown in the following list, to be qualified, some of the expenses must be required by the school and some must be incurred by students who are enrolled at least half-time, defined later.
  1. The following expenses must be required for enrollment or attendance of a designated beneficiary at an eligible postsecondary school.
    1. Tuition and fees.
    2. Books, supplies, and equipment.
  2. Expenses for special needs services needed by a special needs beneficiary must be incurred in connection with enrollment or attendance at an eligible postsecondary school.
  3. Expenses for room and board must be incurred by students who are enrolled at least half-time (defined below).The expense for room and board qualifies only to the extent that it isn't more than the greater of the following two amounts.
    1. The allowance for room and board, as determined by the school, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student.
    2. The actual amount charged if the student is residing in housing owned or operated by the school.
    You may need to contact the eligible educational institution for qualified room and board costs.
  4. The purchase of computer or peripheral equipment, computer software, or Internet access and related services if it's to be used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible postsecondary school. (This doesn't include expenses for computer software for sports, games, or hobbies unless the software is predominantly educational in nature.)
taxmap/pubs/p970-026.htm#en_us_publink100077340

Half-time student.(p52)

rule
A student is enrolled “at least half-time” if he or she is enrolled for at least half the full-time academic work load for the course of study the student is pursuing, as determined under the standards of the school where the student is enrolled.
taxmap/pubs/p970-026.htm#en_us_publink100077341

Qualified Elementary and Secondary Education Expenses(p52)

rule
These are expenses for no more than $10,000 of tuition, incurred by a designated beneficiary, in connection with enrollment or attendance at an eligible elementary or secondary school.