Payments qualified education program taxable

For schools that use clock or credit hours and do not have academic terms, the payment period may be treated as an academic period. You cannot claim a credit for education expenses paid with tax-free funds. You must reduce the amount of expenses paid with tax-free grants, scholarships and fellowships and other tax-free education help. You can claim the credits for any amounts not refunded if the student withdraws. See Publication for information on what to do if you receive a refund of qualified education expenses during the tax year.

Return to Education Credits home page. See Education Credits: Questions and Answers. By Kathryn Flynn February 5, Recommended Articles. Related Articles States where you can claim a prior-year plan tax deduction. Tuition Gift Tax Exclusion. Maximum Plan Contribution Limits by State. Her grandparents also received a check from the account they set up. Burtha would receive a Q showing the distribution made to her, and her grandparents would receive a Q showing the distribution made to them.

TaxAct automatically totals distributions entered in the return. If the student was the beneficiary of any distribution not entered in the return, TaxAct will prompt you to enter this amount after you have entered your Q information. Since the calculation of taxable earnings is made separately for QTP and ESA distributions, the distributions for each type of program must be totaled separately. That is, all of the beneficiary's QTP distributions are totaled and all of the beneficiary's ESA distributions are totaled.

TaxAct calculates the AQEE and determines if any part of the distributed earnings must be included in income. The recipient listed on the Q enters the form in his or her return and therefore should report any taxable income. The beneficiary is listed as the recipient of a QTP distribution when the distribution is made 1 directly to the beneficiary, or 2 to an eligible school for the benefit of the beneficiary. Otherwise, the account owner is listed as the recipient of a QTP distribution.

The beneficiary should always be listed as the recipient of an ESA distribution. More In Help. Contributions QTP contributions on behalf of any beneficiary can't be more than the amount necessary to provide for the qualified higher education expenses of the beneficiary.

The benefits of establishing a QTP are Earnings accumulate tax free while in the account. The beneficiary doesn't generally have to include the earnings from a QTP as income.

Distributions aren't taxable when used to pay for qualified higher education expenses including tuition at an elementary or secondary public, private, or religious school.