Question

Can 2018 spring semester tuition (paid in December 2017) be qualified tax-free expense for an Coverdell ESA distribution in 2018?

Forum|Forum|7 years ago
June 6, 2019
1 reply
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The December 2017 payment was not claimed for any tax credit in 2017 tax return. Just want to know whether it qualifies for ESA distribution purpose.

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Carl11_2

Employee

Yes. Understand this when it comes to taxes and education.

- Scholarships, grants, 529 funds, etc, are claimed as taxable income (*initially*) in the tax year they are received. It does not matter what tax year that money is *for*.

- Qualified education expenses are claimed in the tax year they are paid. It does not matter what year is paid *for*.

Hal_Al

Employee

Sorry to give you conflicting info, but I believe the answer is no.
To be a qualified distribution, the money must be used to PAY qualified expenses, in the same year as the distribution. So, money paid in 2017 cannot be reimbursed by a 2018 distribution, even though the payment was for a 2018 term.