Use of 529 funds to pay for multiple computers

Forum|Forum|3 years ago
March 9, 2023
2 replies
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We know that a computer is an essential part of college attendance (hence required) as most education, textbooks, quizzes, homework, research and exams are conducted on the computer.

Hence the following hypothetical question:

Is there any reason that an undergrad college student should not purchase a new expensive computer 'every year' while attending college and pay for it using the 529 distributions? Will this become a questionable or flaggable event from the tax audit perspective? (or perhaps the computer is lost/damaged/stolen)

I am fully aware of future options of using excess 529 funds for grad school and/or other beneficiaries etc. But this is just a hypothetical question with a simple objective: Use as much of the 529 funds without penalty, sooner than later.

TIA

Best answer by Bsch4477

You could do that if you believed that buying a new computer every year is a good use of that money.

Bsch4477Answer

Employee

You could do that if you believed that buying a new computer every year is a good use of that money.

Carl11_2

Employee

I really wouldn't know if it would flag anything. But if I were an IRS agent and saw that, it would at least get my attention. There are valid reasons though, that I could see a student buying a second new computer as a qualified expense say, once during their student status. For example, the computer was lost, stolen, destroyed, or something. But if that were to be claimed every year, then you've got my attention.

Of course, from an IRS perspective I'd have to be looking for something to flag too. In my opinion (we all know what opinions are like) if the IRS ever does get the funding to hire the 87,000 new agents they want in addition to the 82,000 they already have, they're not hiring them to go after rich people. I would expect a higher level of scrutiny to be given to a higher number of returns every year. But that's me.