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Your child’s education savings account may be able to help alleviate some of the unexpected expenses that may be popping up for students.
Due to the ongoing, unpredictable COVID-19 pandemic, many school districts are enacting safety measures that include keeping students home and moving to a virtual learning model. This may require many families to secure the necessary equipment and capabilities for this type of learning, including a tablet or computer (if the school doesn’t provide one) and a reliable internet connection.
If your back-to-school to-do consists of preparing for Zoom calls instead of procuring pencils, notebooks, and the usual school supplies, you may be wondering how you’ll pay for the potential added cost.
Do you have a savings vehicle, such as a Coverdell Education Savings Account (CESA), for your child? You may be able to tap into it to cover these distance learning costs.
Not only can CESAs cover school-related expenses for college students, but elementary and high school expenses are also eligible, according to IRS Publication 970 .
To be eligible, education-related expenses must be “expenses required for the enrollment or attendance of the designated beneficiary at an eligible educational institution,” the IRS states. This includes elementary, secondary, and higher education institutions.
Qualifying expenses may include tuition, books, and supplies. Do the eligible expenses extend to supplies needed – such as a computer or internet connection – when education from an eligible institution is done remotely? Here’s what IRS Publication 970 says:
The purchase of computer or peripheral equipment, computer software, fiber optic cables related to computer use, or Internet access and related services is a qualified elementary and secondary education expense if it is to be used by the beneficiary and the beneficiary’s family during any of the years the beneficiary is in elementary or secondary school. (This doesn’t include expenses for computer software designed for sports, games, or hobbies unless the software is predominantly educational in nature.)
The same guidelines also apply to postsecondary expenses.
[Related: Coverdell Education Savings Account FAQs]
More information can be found in IRS Publication 970. As always, it is best to consult your tax advisor or other financial professional before making any decisions.
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