Wally wrote:

- quote -

I think what you are asking is whether you can treat as
qualified higher education expense amounts paid via loans to
your child. The answer is yes.

Please note that you identified $9300 for room and board.
This amount is qualified higher education expense if the
student resides in institutionally owned or operated
housing, and the room and board costs do not exceed the
amount normally assessed most residents for room and board
at the institution. If the student resides in some other
type of housing then the maximum amount that can be
considered as qualified expense is $2500 for the year.

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >

Here are my son's (heavily rounded-off) college education expenses for
2005

1/2005:
Tuition $12000
Room 3000
Board 1500
Books 500
------
Total $17000

9/2005:
Tuition $13000
Room 3200
Board 1600
Books 500
------
Total $18300

Here's how the college was paid

1/2005:
Scholarship (tax free) $8000
Federal PLUS loan (mine) 6000
Subsidized Stafford loan (my son's) 1000
Unsubsidized Stafford loan (my son's) 1000
Cash 1000
------
Total $17000

9/2005:
Scholarship (tax free) $8000
Federal PLUS loan (mine) 7000
Subsidized Stafford loan (my son's) 1000
Unsubsidized Stafford loan (my son's) 1000
Cash 1300
------
Total $18300

I took a $20000 early withdrawal from a traditional IRA in
2005. According to page 53 of 2005 IRS Pub. 970 and page 49
of 2004 IRS Pub. 590 (I couldn't find a 2005 version on the
IRS web site), I can exclude the $13000 PLUS loan amounts
from the 10% early withdrawal penalty as well as the $2300
cash payments, for a total exclusion of $15300. This will
leave $4700 of the early IRA withdrawal subject to the %10
early withdrawal penalty.

My question is: Can I also exclude the $4000 from my son's
Perkins and Stafford loans from the early withdrawal
penalty? In other words, will only $700 of my early IRA
withdrawal be subject to the %10 penalty?

Thanks,
Wally

<< ================================================== ===== > << The foregoing is intended for educational purposes only > << and does NOT constitute legal OR professional advice. > << > << The Charter and the Guidelines for submitting > << messages to this newsgroup are at www.asktax.org. > << Copyright (2006) - All rights reserved. > << ================================================== ===== >