PATH Act and 529s

The PATH Act that went into effect in 2015 includes several changes pertinent to 529 plans. The big ones:

  • Computers, peripherals and Internet access are now qualified expenses. So add any money spent on those to what’s on your 1098-t.
  • People with multiple 529 accounts no longer need to aggregate them to determine how much is taxable earnings in the event of an excess withdrawal. Instead a single account can be used for that, as long as funds were withdrawn from that account.
  • In the event you receive a refund from a college– for example, you withdraw from a class– you can now redeposit that refund in the 529 account within 60 days for no penalty.

As you file your taxes, remember that not all qualified expenses will be on your 1098-t. That form will only show what was paid to the college directly. If your student lives off campus, the money for that (based on their school’s allowable off campus expense) is in addition to that, as are money spent on books, computers, etc., not purchased at school. You should keep records of such purchases in case of an audit.

 

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