Maximizing K-12 Options
Benefits now begin as a child enters kindergarten. There are currently limited details from the IRS on the K-12 options. As stated, tuition, learning materials, and tutoring are included outside of the home. Curriculum, curricular materials, and online education materials, as well as books are able to be paid for with 529 funds.
- Consider that a book the child is reading or a computer program teaching math or reading skills are learning or online educational materials.
- Consider group home or private schooling. Private school tuition is generally qualified, as is tutoring outside of the home.
- Any educational class tuition or tutoring use of funds should have documentation. The account owner should have proof ready that the teacher/tutor is either a subject matter expert or a licensed teacher or has previously taught at an eligible educational institution. Educational classes are not only an important part of math, but also music lesson tutoring or physical education tutoring by a subject expert at a sports facility. Again, there are currently limited IRS details on what constitutes an "educational class”, a “tutor”, or a “subject matter expert”.
Andrew is a grandparent to 3 boys. He wants these 8, 9, and 10 year olds to be musicians. He is willing to pay for weekly violin, piano, and trumpet “tutoring” at the local music academy. Andrew has each teacher sign they are “subject experts” and keeps receipts of 529 distributions from each of the boys’ accounts for the lessons.
But we forgot Andrew’s only granddaughter, who at 16 is a ranked tennis player–in line for an eventual college scholarship. She also receives weekly expert tutoring in tennis from a pro at the tennis club. There is not yet IRS guidance whether or not this would be a qualified disbursement of Andrew’s 529 funds for this beneficiary. Keep receipts.
See K-12 Teacher vs. Tutor vs. Coach, p44.
*Documentation of fees for high school standardized tests (such as ACT or SAT), AP class and test fees, dual enrollment classes, or other exams related to university admission should be kept.
*Trips to various campuses to select a university or other school are not considered qualified expenses.
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.