Qualified Tuition Programs (QTP) allows taxpayers to buy in-kind tuition credits for qualified higher education expenses...

Qualified Tuition Programs (QTP) allows taxpayers to buy in-kind tuition credits for qualified higher education expenses or to contribute to an account.

What are the inclusions of in-kind tuition credits for qualified higher education expenses and the contribution to the educational incentive account? Explain.

Expert Solution

To claim a legitimate expense there has to be a legitimate income against which the expense can be claimed.based on the same logic we can relate it to QTP.

A QTP (Section 529 Tution Plan) allows tax payers to

Option 1. buy in kind credit or certificates for qualified higher education expenses (Prepaid) or

Option 2. to contribute to an account established to meet qualified higher education expenses (Savings) as per the limit stated in law.

The expenses i.e qualified higher education expenses (QHEE)

" INCLUDE "i.e the list is not exhaustive and can include similar items

Tuition

Fees

Books

Supplies and Equipment required for enrollment or attendance at an eligible educational institution

Hence if a person does any of above two options i.e to buy in kind or to contribute to QHEE, his income will be excluded from the tax up to that extent.this provides an added advantage against a person who does not buy or contribute the same and so it will be taxed in the same year, whereas the person who contributes or buys towards QHEE shall not be taxable in the year of buying or contributing and the same can also be used (tax free) in the year of withdrawal.

ekkarill92 answered 4 hours ago

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