Can I Use a 529 Account to Pay for Multiple Computing Devices

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OSUBucks4Evr
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Joined: Sun Aug 02, 2015 11:10 am

Can I Use a 529 Account to Pay for Multiple Computing Devices

Post by OSUBucks4Evr » Sun Jun 18, 2017 11:22 am

Bogleheads,

My apologies for this post being so long. I am not good at being succinct.

My question is whether 529 dollars can be used to pay for the purchase of multiple computing devices (an iPad mini and a laptop) for the same student. In this case, they will be purchased in the same year.

This fall, my daughter starts (full time) her freshman year at a public university in our state. The nursing program she’s in REQUIRES all first-year students to purchase an iPad mini with keyboard (the College of Nursing designs standardized content, assignments and apps for the iPad mini, and because of its small size, it’s also approved for use at clinical sites). At a recent parent/student orientation, a parent asked if the iPad mini is the only electronic device nursing students will need. The orientation speaker said it is recommended, but not required, that students also have a regular laptop, and gave the example that trying to type a multi-page paper on an iPad mini keyboard is difficult.

I was planning to buy my daughter a new laptop this summer, for use at college, as her current laptop is several years old, runs slow, and is not very upgradable. Until recently, the nursing program iPad mini requirement stated it must be purchased before sophomore year, so I had planned to buy the laptop this year and the iPad mini next year, and use 529 funds to pay for both. But now the school requires nursing students to have the iPad mini by the start of freshman year, so I need to purchase both the iPad mini and laptop in the next few weeks. Does anyone see anything in IRS Pub 970 verbiage (see below) that implies I can use 529 dollars to fund only one electronic device per student per year, or for that matter, only one device per student per college career?

The verbiage below is from IRS Publication 970 - Tax Benefits for Education, Chap 8 (QTP), pgs 56-58: https://www.irs.gov/pub/irs-pdf/p970.pdf
Qualified education expenses. These are expenses related to enrollment or attendance at an Eligible educational institution (defined later). As shown in the following list, to be qualified, some of the expenses must be required by the institution and some must be incurred by students who are enrolled at least half-time.
4. The purchase of computer or peripheral equipment, computer software, or Internet access and related services if it is to be used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible educational institution. (This does not include expenses for computer software for sports, games, or hobbies unless the software is predominantly educational in nature.)

blevine
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Re: Can I Use a 529 Account to Pay for Multiple Computing Devices

Post by blevine » Sun Jun 18, 2017 11:26 am

I would say yes.
Note just keep your receipts in case audited.
Also note best chance of NOT being audited, is to have all checks written to the school (tuition) and to your kid.
So for the computing devices, have them send check to your kid and deposit in a joint acct with your child,
which is used to pay the credit card bills for such school expenses.

If the check is made out to you, more chance of being audited.

Regardless, I see no issue, these are needed for educational purposes, they are allowed.

Spirit Rider
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Joined: Fri Mar 02, 2007 2:39 pm

Re: Can I Use a 529 Account to Pay for Multiple Computing Devices

Post by Spirit Rider » Sun Jun 18, 2017 3:09 pm

blevine wrote:I would say yes.
Note just keep your receipts in case audited.
Also note best chance of NOT being audited, is to have all checks written to the school (tuition) and to your kid.
So for the computing devices, have them send check to your kid and deposit in a joint acct with your child,
which is used to pay the credit card bills for such school expenses.

If the check is made out to you, more chance of being audited.

Regardless, I see no issue, these are needed for educational purposes, they are allowed.
I agree there should be no problem if the tablet and the laptop are both used primarily for education purposes.

Significant anecdotal evidence disputes the validity of statements you have made in bold. It might seem like the case, but that is just not what the evidence suggests.

I have paid all college expenses for both of my girls out-of pocket and then took distributions from their 529 account to reimburse myself including for laptops. I never received a CP2000. In fact the parents I know who received CP2000s, had the schools paid directly from the 529 account.

The IRS has some problem where they seem to issue CP2000s without rhyme or reason. There is no evidence to support your statements.

blevine
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Re: Can I Use a 529 Account to Pay for Multiple Computing Devices

Post by blevine » Thu Jun 22, 2017 8:30 pm

Spirit Rider wrote:Significant anecdotal evidence disputes the validity of statements you have made in bold. It might seem like the case, but that is just not what the evidence suggests.

I have paid all college expenses for both of my girls out-of pocket and then took distributions from their 529 account to reimburse myself including for laptops. I never received a CP2000. In fact the parents I know who received CP2000s, had the schools paid directly from the 529 account.

The IRS has some problem where they seem to issue CP2000s without rhyme or reason. There is no evidence to support your statements.
So my son who files no tax returns whatsoever, is going to be audited ?
Or they will audit me for when money went directly to the college ?

The IRS can audit anyone they want anytime, but they don't have the resources to do so.
My point was it's a waste of time for them in these cases, and I have read many experts who recommend
having payments to your kids or the school, not to yourself. Your anecdotal experience would not change my decision
as to how to take distributions. If they are dumb enough to audit where there is not even a hint of a problem, let them,
but I have no anecdotal evidence like yours, and many sources who recommend what I am doing.

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