Since qualified expenses generally include books, supplies, and equipment - does a laptop computer qualify as equipment since most universities require one for classes?

Apparently, the IRS rules for Section 529 qualified expenses are more strict than the Coverdell Plans, but specifically allow for the following expenses as follows;

1. Tuition
2. Room and Board (student must be enrolled at least half-time)
3. Computers / Laptops (only if the school requires them)
4. Books and Supplies (as required by the university)

Thus, in your case since the University requires you to have a computer, this expense would considered an eligible expense in your case.

__________________
Find a CPA near you!

Ask TaxGuru Please refer to the legal disclaimer.

Actually, it looks as though computers qualify as a new provision for 2009 and 2010, even if not required by the university. I found the following on the IRS site:

Q. What is new this year with 529 plans?

A. A qualified, nontaxable distribution from a 529 plan during 2009 or 2010 now includes the cost of the purchase of any computer technology, related equipment and/or related services such as Internet access. The technology, equipment or services qualify if they are used by the beneficiary of the plan and the beneficiary's family during any of the years the beneficiary is enrolled at an eligible educational institution.

Q. What does “computer technology or equipment” mean?

A. This means any computer and related peripheral equipment. Related peripheral equipment is defined as any auxiliary machine (whether on-line or off-line) which is designed to be placed under the control of the central processing unit of a computer, such as a printer. This does not include equipment of a kind used primarily for amusement or entertainment. “Computer technology” also includes computer software used for educational purposes.

Q. Is this “cost of the purchase of any computer technology or equipment or Internet access and related services” available for any other education benefit under the tax laws?

A. No, it is only for 529 plan withdrawals. Such costs are generally not qualifying expenses for the American opportunity credit, Hope credit, lifetime learning credit or the tuition and fees deduction.