As a new college year begins, it's important to remember what expenses are covered by a 529 plan. Understanding this can help you make the most of your savings.
529 plans are designed to cover qualified education expenses. Knowing which expenses qualify can ensure you use the funds effectively.
Let's dive into what you can and cannot pay for with your 529 plan. This knowledge can help you avoid unnecessary taxes and penalties.
A 529 plan covers various qualified education expenses.
- Tuition and Fees: Payments for enrollment or attendance at an eligible educational institution.
- Books, Supplies, and Equipment: Costs of textbooks, school supplies, and equipment required for courses.
- Room and Board: If the beneficiary is enrolled at least half-time, room and board expenses are covered. This includes on-campus housing as well as off-campus housing, up to the cost of on-campus housing.
- Computer Technology: Computers, peripheral equipment (like printers), internet access, and related services used by the beneficiary during their time at the eligible institution.
- Special Needs Services: Expenses for special needs services incurred in connection with enrollment or attendance at an eligible institution.
- Apprenticeship Programs: Costs associated with registered apprenticeship programs, including fees, textbooks, supplies, and equipment required for the program.
- K-12 Tuition: Up to $10,000 per year per beneficiary can be used for tuition at public, private, or religious elementary or secondary schools.
- Student Loan Repayments: Up to $10,000 (lifetime limit) can be used to repay the beneficiary’s student loans. Additionally, another $10,000 can be used to repay student loans for each of the beneficiary’s siblings.
Families can maximize their tax advantages by using a 529 plan for these expenses while covering essential educational costs.
If you have questions about this topic or how other tax strategies can help you save taxes book a FREE Tax Advisory Call Today.