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My grandson has an educational ira and is about to start…

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My grandson has an...

My grandson has an educational ira and is about to start college. he will need an auto for transportation. can a portion of the ira dollars be used to purchase a car and auto insurance for his transportation

Accountant's Assistant: The Accountant will know how to help. Please tell me more, so we can help you best.

The college is about 25 miles from his home

Accountant's Assistant: Is there anything else the Accountant should be aware of?

His single mom mother cannot afford to purchase the car and auto insurance

Submitted: 7 months ago.Category: Tax
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12/6/2017
Tax Professional: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 7 months ago
Chad EA, CDFA®, CFP®
Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional
Category: Tax
Satisfied Customers: 2,613
Experience: IRS Licensed Enrolled Agent, CDFA ® CFP ®, MBA
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Welcome to JustAnswer!

My name is ***** ***** I will be able to assist you today.

Educational IRA's more commonly referred to as Coverdelll Savings account.

Coverdell ESAs can be used only to pay for qualified education expenses, such as tuition and fees; the cost of books, supplies and other equipment; and in some situations the cost of room and board.

Qualified elementary and secondary school expenses include expenses for tuition, fees, and academic tutoring; special needs services in the case of a special needs beneficiary; books, supplies and other equipment; computer technology, equipment, and Internet access for the use of the beneficiary; and, in some cases, room and board, uniforms, transportation, and extended day programs.

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Tax Professional: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 7 months ago

Deductible Transportation Expenses

If you are regularly employed and go directly from home to school on a temporary basis, you can deduct the round-trip costs of transportation between your home and school. This is true regardless of the location of the school, the distance traveled, or whether you attend school on nonwork days.

___

Transportation expenses include the actual costs of bus, subway, cab, or other fares, as well as the costs of using your car. Transportation expenses don't include amounts spent for travel, meals, or lodging while you are away from home overnight.

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Tax Professional: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 7 months ago

Therefore, in my opinion after reviewing IRS Publication 970 the purchasing of a vehicle would not be a qualified educational expense.

___

The earnings portion of a Coverdell ESA distribution that is not considered to be for qualified education expenses will be included in the gross income of the beneficiary and an additional 10 percent tax penalty may apply.

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Tax Professional: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 7 months ago

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Tax Professional: Chad EA, CDFA®, CFP®, CERTIFIED FINANCIAL PLANNER ®, Professional replied 7 months ago

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