Backpack qualified expense for 529 plan?

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InvestoGuy
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Backpack qualified expense for 529 plan?

Post by InvestoGuy » Tue Aug 08, 2017 10:00 am

Hello,
I searched a bit on the internet but could not come up with a specific list of qualified school supplies for a 529 plan. I bought a $34 backpack and a $17 laptop sleeve. Are these qualified Supplies expenses?
Thanks.

Grt2bOutdoors
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Re: Backpack qualified expense for 529 plan?

Post by Grt2bOutdoors » Tue Aug 08, 2017 11:04 am

https://www.irs.gov/pub/irs-pdf/p970.pdf

Pgs. 57-59; what does it say?
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livesoft
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Re: Backpack qualified expense for 529 plan?

Post by livesoft » Tue Aug 08, 2017 11:17 am

I will say, "No, since a backpack is not a required expense."

We stick to books, room & board, tuition, and required fees.
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InvestoGuy
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Re: Backpack qualified expense for 529 plan?

Post by InvestoGuy » Tue Aug 08, 2017 11:26 am

Grt2bOutdoors wrote:https://www.irs.gov/pub/irs-pdf/p970.pdf

Pgs. 57-59; what does it say?
Not a whole lot, with regards to my specific question, unless I am missing something.

InvestoGuy
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Re: Backpack qualified expense for 529 plan?

Post by InvestoGuy » Tue Aug 08, 2017 11:29 am

livesoft wrote:I will say, "No, since a backpack is not a required expense."

We stick to books, room & board, tuition, and required fees.
Well, 529 allows Laptops, software, and supplies. So was wondering if a backpack falls under supplies?

livesoft
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Re: Backpack qualified expense for 529 plan?

Post by livesoft » Tue Aug 08, 2017 11:30 am

A backpack is not a "supply." A supply is ink, paper, and other consumables. Shoes are not a supply nor are shirts.
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CAsage
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Re: Backpack qualified expense for 529 plan?

Post by CAsage » Tue Aug 08, 2017 11:31 am

Seems like a stretch. I would stick to exactly what they list - I mean, you need socks too but I would not go there. Are you truly in the position where you a) have no other way to pay for the backpack and laptop cover or b) have so much money in the 529 plan that you really think you cannot spend it on other, much more higher ticket and approved items?
Up to you; it you are audited will you be comfortable defending that?
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BHUser27
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Re: Backpack qualified expense for 529 plan?

Post by BHUser27 » Tue Aug 08, 2017 11:36 am

Plain language answers from the IRS can be found here...
https://www.irs.gov/individuals/qualified-ed-expenses
Quote from above link:
Qualified expenses are amounts paid for tuition, fees and other related expense for an eligible student that are required for enrollment or attendance at an eligible educational institution. You must pay the expenses for an academic period* that starts during the tax year or the first three months of the next tax year.

mega317
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Re: Backpack qualified expense for 529 plan?

Post by mega317 » Tue Aug 08, 2017 11:42 am

Not just supplies, also equipment. You could argue that if the backpack is needed to transport qualified expenses to qualified courses that it should count. In fact a backpack is absolutely necessary if you are traveling to multiple classes in one trip without stopping home. You have multiple books, some loose papers and/or notebooks, the computer, writing equipment (supplies?).

You could argue that the sleeve is necessary to protect a qualified expense while it's inside the other (possibly) qualified expense with other qualified expenses.

If they are used primarily for school I would feel comfortable defending those purchases, I also wouldn't do it.

runner3081
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Re: Backpack qualified expense for 529 plan?

Post by runner3081 » Tue Aug 08, 2017 3:03 pm

mega317 wrote:You could argue that if the backpack is needed to transport qualified expenses to qualified courses that it should count. In fact a backpack is absolutely necessary if you are traveling to multiple classes in one trip without stopping home. You have multiple books, some loose papers and/or notebooks, the computer, writing equipment (supplies?).
You could also use a plastic grocery store bag. Backpack is a convenience, not required.

WL2034
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Re: Backpack qualified expense for 529 plan?

Post by WL2034 » Tue Aug 08, 2017 3:16 pm

CAsage wrote:Are you truly in the position where you a) have no other way to pay for the backpack and laptop cover or b) have so much money in the 529 plan that you really think you cannot spend it on other, much more higher ticket and approved items?
+1 -- this is $51 of questionable expenses. Does it matter? If it is covered, maybe buy a Louis Vuitton backpack and computer bag?

inbox788
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Re: Backpack qualified expense for 529 plan?

Post by inbox788 » Tue Aug 08, 2017 3:18 pm

InvestoGuy wrote:
livesoft wrote:I will say, "No, since a backpack is not a required expense."

We stick to books, room & board, tuition, and required fees.
Well, 529 allows Laptops, software, and supplies. So was wondering if a backpack falls under supplies?
It's peanuts, but I'd include it. My layman's reading of the "b. Books, supplies, and equipment." makes me think it's covered as equipment. Are you that overinvested in 529 that you're looking for these scraps?

Spirit Rider
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Re: Backpack qualified expense for 529 plan?

Post by Spirit Rider » Tue Aug 08, 2017 4:22 pm

mega317 wrote:Not just supplies, also equipment. You could argue that if the backpack is needed to transport qualified expenses to qualified courses that it should count. In fact a backpack is absolutely necessary if you are traveling to multiple classes in one trip without stopping home. You have multiple books, some loose papers and/or notebooks, the computer, writing equipment (supplies?).

You could argue that the sleeve is necessary to protect a qualified expense while it's inside the other (possibly) qualified expense with other qualified expenses.

If they are used primarily for school I would feel comfortable defending those purchases, I also wouldn't do it.
The term required is very specific and refers only to those items required by the institution for enrollment or attendence

mega317
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Re: Backpack qualified expense for 529 plan?

Post by mega317 » Tue Aug 08, 2017 10:48 pm

Ok I read again and more carefully and I agree that "supplies and equipment" must be required "by the institution". How do y'all handle books that are on the syllabus as "recommended"? Also not a qualified expense?

inbox788
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Re: Backpack qualified expense for 529 plan?

Post by inbox788 » Tue Aug 08, 2017 11:20 pm

mega317 wrote:Ok I read again and more carefully and I agree that "supplies and equipment" must be required "by the institution". How do y'all handle books that are on the syllabus as "recommended"? Also not a qualified expense?
It sure looks like there's room for interpretation here. A lot of recommended books are really required in some classes. I doubt you'd get in trouble buying textbooks used in classes simply because a teacher decided to list it under the recommended books. But if you take that logic further, you could say soap and shampoo are required supplies living in a dorm, and I'm pretty sure you'd have a tough time explaining that one. On the other hand, bed sheets and other dorm supplies are sometimes included in the room cost while others require that you bring your own. Doesn't make sense that a school furnished one is covered, but if you've got a choice, it becomes not required, as if you could sleep on a mattress without a sheet. These splitting hairs is why some dorm rooms may include phone, cable and internet services as part of the room cost so it can be paid with tax advantaged dollars.

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serbeer
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Re: Backpack qualified expense for 529 plan?

Post by serbeer » Tue Aug 08, 2017 11:54 pm

Oh, please. Like IRS is going to go after you for buying a under $50 backpack for taking books and laptop to classes.
Common folks, the question is not even worth discussing.

mega317
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Re: Backpack qualified expense for 529 plan?

Post by mega317 » Wed Aug 09, 2017 12:42 am

I think many college students would go without soap before they'd take books to class in a plastic grocery bag. 8-)
serbeer wrote:Oh, please. Like IRS is going to go after you....
...Common folks, the question is not even worth discussing.
Doesn't make it legal. And we discuss lots of things here that aren't worth discussing. What else are you going to do on a Tuesday night when the baby is sleeping and wife is out of town? Are you calling us common folk?

miamivice
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Re: Backpack qualified expense for 529 plan?

Post by miamivice » Wed Aug 09, 2017 3:42 am

I can give you my opinion, but it doesn't count. The US Tax Court is the entity whose opinion matters in this particular instance. You can research the tax court rulings on qualified expenses for 529 plans.

You can review one Tax Court case here: https://www.ustaxcourt.gov/UstcInOp/Opi ... px?ID=6505 Keep in mind in 2005 computers were not qualified expenses for a 529 plan. You can look at the logic and type of tests the tax court uses to determine whether the computer expense is qualified or not. It also discusses additional accessory purchases like bedding, appliances, etc.

My opinion, based on my reading of the Tax Court decision, is that a backpack would fail an audit on a required item for attending college, and therefore, would not be a qualified expense for the purpose of a 529 plan.

jerryk68
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Re: Backpack qualified expense for 529 plan?

Post by jerryk68 » Wed Aug 09, 2017 8:56 am

529's are a great investments for kids for college; however, consider Coverdell or UGMA accounts for incidental costs like backbacks.

InvestoGuy
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Re: Backpack qualified expense for 529 plan?

Post by InvestoGuy » Wed Aug 09, 2017 9:04 am

miamivice wrote:I can give you my opinion, but it doesn't count. The US Tax Court is the entity whose opinion matters in this particular instance. You can research the tax court rulings on qualified expenses for 529 plans.

You can review one Tax Court case here: https://www.ustaxcourt.gov/UstcInOp/Opi ... px?ID=6505 Keep in mind in 2005 computers were not qualified expenses for a 529 plan. You can look at the logic and type of tests the tax court uses to determine whether the computer expense is qualified or not. It also discusses additional accessory purchases like bedding, appliances, etc.

My opinion, based on my reading of the Tax Court decision, is that a backpack would fail an audit on a required item for attending college, and therefore, would not be a qualified expense for the purpose of a 529 plan.
Thank you. This really helps.

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