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#43339 - 05/14/08 10:24 AM Using 529 for living expenses
jasfam
Registered: 05/14/08
Posts: 3 		My wife currently has a 529 fund in NY. She is currently working and not going to college now, but is thinking of changing careers and going to a vocational business school to learn a new field. I've already confirmed that the school she would go to is a eligible educational institution so the tuition would be a qualified withdrawal. I know the NY 529 allows for qualified withdrawals for room and board up to the "cost of attendance" rules. My question is, since my wife will be living at home and this is a vocational business school without dorms, will we be able to use the 529 to help pay for a portion of her "living" expenses, that is, a portion of paying the bills for rent, food, etc. She would be going to this school fulltime for 3 months. Thanks for any input.
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#43340 - 05/14/08 11:33 AM Re: Using 529 for living expenses [Re: jasfam]
Drew
Registered: 01/09/00
Posts: 2457 		More than 1/2 time allows one to apply the room and board type rules.

HINT--the tax code is quite liberal as to deductibility of costs of improving ones career. The major area that is excluded is training for a new career or new license --but what may be new to her may not per se be new in tax sense--then again it may be "new" its not necessarily rational at laymasn level....---I suggest further homewok ---what is nature of additional training she seeks? Her current job is? In some cases it makes sense to start new field FIRST then seek training to stay in it or improve in it and in some cases it makes a whopping $$ difference!
_________________________
Drew

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#43341 - 05/14/08 11:53 AM Re: Using 529 for living expenses [Re: Drew]
jasfam
Registered: 05/14/08
Posts: 3 		Thanks for the reply.

As far as the "hint" part of your reply - are you speaking in general terms about income tax deductions? She is currently is a bank teller and is looking to get into the health field as a medical coder/biller. So, I would think those are totally different careers. It would be a good idea to start the new job first if possible, but without any background at all, that would be impossible to do.
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#43342 - 05/14/08 01:29 PM Re: Using 529 for living expenses [Re: jasfam]
Drew
Registered: 01/09/00
Posts: 2457 		Career related training is deductible; The fatal standard for a new career is does it require some license or permit or state certification or exam ---so if I wanted to become a pilot, a prison guard, RN, MD, police officer , CDL, public school teacher, lawyer --these may be no brainer "new" careers--but even on such expensive things as a Harvard MBA the tax issues have flipflopped (remember an MBA doesn't necessarily qualify you to do anything). Chose your words more carefully : So if somebody with some sort of semiprofessional skills in a office called a bank and sought additional semiprofessional skills which worked in a office called a doctors office I'm not so sure I'd conclude its a NEW career in tax jargon. When I went from an engineer on classified weapons systems to human resources with a utility firm I didn't necessarily have a new career or license or permit or degree. Now the IRS has fought against the folks who sought to write off Harvard MBA's and won some reversals in tax court of prior victories of folks who did just that--because a couple of smart MBAs were STUPID and chose to take on IRS without counsel. But the issues of somebody who takes 3 months of training to advance a generic business career are a whole lot less compelling to challange and I suspect the IRS has other priorities. At some point every update I take could be challanged if it opens up a remotely possible new door for me---The school may posture it as a NEW career--but you can chose other words. And the last young woman I know to entered "coder/biller" area in Dec/Jan did in fact work in a medical office earlier as "receptionist /clerk" Personally I might use a tax pro to help define my issues and do my returns --and not the one with 10 hrs of training in a shopping mall booth.

As an aside--some of the vocational training stuff I've seen seems designed to profit the promoters and very little else and that includes a pipeline thru one of my neighbors who worked (past tense!) for a for profit educational institution which sort of just closed its doors. And some of the recruiters for such instutions can earn well into 6 figure income---you figure that one out. I'd do some homework as to completion rate of entrants and job placement records--and I'd not take institutions marketing stuff as gospel but I'd also call and ask about among medical offices etc. My young friend who completed her training did so at a local community college (cheap) --and her schedule permitted both work and school.
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Drew

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#43343 - 05/14/08 03:13 PM Re: Using 529 for living expenses [Re: Drew]
jasfam
Registered: 05/14/08
Posts: 3 		Thanks for the input. Your points jogged my memory that my wife several years ago actually did work for a very short period of time as a receptionist in a doctors office, so I might be able to use that.

Also good points on the heads up about vocational schools. The particular one we have chosen has been in business for 40 years and is accredited by NY State dept of education. And we know several people that have used them with good results. So I'm pretty confidant it will work out.

Thanks again.
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