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Wallstreet Esq.
Wallstreet Esq., Tax Attorney
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Experience:  10 years experience
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We are US citizens living in New Zealand. Our son wants to

Customer Question

We are US citizens living in New Zealand. Our son wants to attend Auckland University of Technology, which is listed as "deferment only." He has been accepted by AUT housing for a single dorm room. We want to use his 529 account to pay tuition and room & board. We will not use federal student loans. Do you agree that the use of the 529 account for tuition and accommodation at AUT constitutes a qualified education expense?
JA: The Accountant will know how to help. Is there anything else important you think the Accountant should know?
Customer: He will be a full-time student.
Submitted: 5 months ago.
Category: Tax
Expert:  Mark Taylor replied 5 months ago.

Hi my name is Mark. I will be happy to help you with your questions. Is Auckland University of Technology different from Auckland University?

Customer: replied 5 months ago.
AUT is different from University of Auckland. AUT is classified as “deferment only” and UofA is classified as “eligible” on the most recent list.
Expert:  Mark Taylor replied 5 months ago.

Deferment only refers to the ability of the student to defer student loan payments while enrolled in a program at this institution.

Distributions from a 529 college savings plan would be tax free if they are used to pay for qualified education expenses at a school that is eligible for Title IV federal student aid. Unfortunately since AUT is not eligible for Title IV federal student aid the distributions would not qualify for tax free treatment.

Customer: replied 5 months ago.
My reply is: “Yes, AUT is different from University of Auckland. AUT is classified as “deferment only” and UofA is classified as “eligible” on the most recent list.”
Expert:  Mark Taylor replied 5 months ago.

As eligible U of A would be eligible for federal student aid distributions. Distributions from a 529 college savings plan to pay qualified education expenses for U of A would be tax free. Unfortunately AUT is not eligible to receive federal student aid distributions. Therefore, distributions from a Section 529 plan to pay for educational expenses to AUT would not be tax free. If expenses came from a 529 you would be responsible for paying taxes on the gain portion of the distribution.