1. Home
  2. Taxes General Forum
  3. Computers: Section 529 and American Opportunity Credit

Computers: Section 529 and American Opportunity Credit

Section 529 plans allow for the purchase of a computer if the school specifically requires a computer for enrollment or attendance.

The American Opportunity Credit allows for the purchase of computers if needed for a course of study.

Does a computer purchase qualify for either of those under the following circumstance?

You are purchasing a computer in 2012 to start freshman year of college. You are choosing to stay in a residence hall (dorm) that focuses on your major with the following: Students take several core courses together; the classes are in the dorm; some professors in your major have offices in the dorm; some professors hold office hours in the dorm; field trips and special interest lectures related to your major are offered to dorm residents but not others in the same major; and your must own a Windows compatible laptop to live in the dorm.

So it?s advantageous for your major to live in the dorm, but it?s not required. If you live in the dorm, you must own a laptop. But it?s not required for enrollment or attendance or your course of study.

Reply to
nielloeb
Loading thread data ...

Before Congress did us a "favor" by saying buying a computer was a qualified use of 529 money I thought I knew the answer to your question.

Now, I'm not so sure. It appears that buying a computer is a qualified education expenditure if and only if that expenditure is specifically listed in the legislation you're trying to take advantage of. So, is "needed" the same as "required"? I say _no_ because if Congress had wanted "required" in the AOC legislation they would not have said "needed."

Therefore, with a tiny amount of doubt, I say your freshman's computer cost is a qualified AOC expenditure.

Reply to
Bill Brown

The AOTC (Sec. 25A) and Qualified Tuition Plans (QTP: Sec. 529) both include a computer as a qualified expense ONLY if it required by the school to attend or take a course.

For two years only (2009 and 2010), Congress amended the definition for QTPs by removing computer technology from the "required" paragraph to a new paragraph that only required its use by the beneficiary and the beneficiary's family during the period of enrollment. Alas, Congress did not extend that benefit beyond 2010.

Therefore, for 2011 and beyond, the definition of a qualified expense for the AOTC and QTPs includes the "required" phraseology.

Reply to
Alan

Thanks, Alan.

I say again, until Congress did us a "favor" by giving as this education related "tax break" I was always confident that the cost of a computer was a qualified expenditure any time "books and supplies" were qualified. That said, are there still colleges out there that do not require their students to have a computer? If so, what the [redacted] are they thinking?

Reply to
Bill Brown

Possibly that their students are smart enough to decide for themselves what makes sense, rather than purchasing a standard model.

Seth

Reply to
Seth

The university I worked at and the two my sons attended required computers with minimum attributes. Students could always buy more computer than the minimum, either through the university or on their own. Since most students I know came or went to college with computers that exceeded the minimum, it is clear that most of them did decide for themselves what made sense (or made sense to their parents).

By making computers required, not only is the cost of the computer a qualified expenditure for many tax breaks but that cost is also part of the needs assessment in determining level of financial aid. Since students need computers to maximize the effectiveness of their educational experience whether formally required or not, I repeat, what are those colleges and universities thinking that fail to require entering students to have a computer?

Reply to
Bill Brown

BeanSmart website is not affiliated with any of the manufacturers or service providers discussed here. All logos and trade names are the property of their respective owners.