What are qualified 529 expenses?

The list of qualified 529 expenses is narrower than most parents expect:

Clearly Qualified - Tuition and fees at eligible institutions - Books, supplies, and required equipment - Computers, software, and internet access (for student) - Room and board (with restrictions) - Special needs equipment

Room and Board Limits This is where families get tripped up: - Must be enrolled at least half-time - Limited to school's "cost of attendance" allowance - Off-campus housing capped at what school charges for room - Utilities may or may not qualify depending on arrangement

NOT Qualified (Penalty Applies) - Transportation and travel - Health insurance (unless charged by school as fee) - Repaying student loans (limited exception exists) - Living expenses beyond room and board - Extracurriculars and sports - Application and testing fees

K-12 Tuition (Limited) - Up to $10,000 per year for K-12 tuition - Only tuition - not books, supplies, or transportation - State tax treatment varies widely

The Tracking Burden You must keep receipts and documentation to prove expenses were qualified. The 529 administrator doesn't verify - if you're audited, the burden is on you.

Apprenticeship Programs - Some qualify since 2019 - Must be registered with Department of Labor - Books and supplies included - Not all programs qualify

What This Means Every dollar spent from a 529 must fit these categories or face penalties. A Child Life Portfolio has no qualified expense list - use the money for anything.