You may pay for a tutor through a 529 account.
Qualified expenses now include tuition for tutoring or educational classes outside of the home, including at a tutoring facility, IF the tutor or instructor is not related to the student and:
- is licensed as a teacher in any state;
- has taught at an eligible educational institution; or
- is a subject matter expert in the relevant subject.
If you decide to use 529 funds to pay a tutor, remember to live by the letter of the law. Currently, there is no IRS case guidance to help and it is not clear when the IRS will provide this. Amendments to rules and policies may happen at any time.
Things you can do to help:
Keep receipts
Ask your “tutors” to sign forms that they are licensed or have taught at an eligible educational institution or are a subject matter expert. Be sure they are located outside of your home and are not related to your student.
Paul is a former spelling bee champ who wants his grandchildren to do well at English. He offers to pay for private spelling lessons for his 4 grandkids at an expert’s home. The (unrelated) teacher signs a note that they are subject matter experts and will give individual and small group instruction. Paul keeps records in case there is ever an audit or change in IRS guidance.
Danni wants her children to be able to score high on the SAT for scholarships, so she hires a math tutor through their high school courses. She pays with 529 funds.
No statement or example on this site should be considered a specific recommendation for your personal situation. Investing and tax strategies each carry significant risks. Examples herein may not apply to your situation. Please consult your estate attorney, tax advisor, or financial advisor for personal advice.