ESA Distribution
Are we able to confirm if educational expenses be withdrawn the same year they were incurred or does it not matter? Is there any exceptions to use ESA contributions for a previous year’s tuition?
Are we able to confirm if educational expenses be withdrawn the same year they were incurred or does it not matter? Is there any exceptions to use ESA contributions for a previous year’s tuition?
Permalink Submitted by Alan - IRA critic on Wed, 2018-11-14 23:48
The expenses are to incurred in the tax year, but there is no definition of “incurred”. The closest is when the expenses are billed, which is normally up front. However, if a bill came in late for last year the IRS is not going to argue that this expenses was not incurred in the current tax year. Due to the small contribution and balance of ESA accounts, the IRS has not paid much attention to them or how the beneficiary defines incurred. That said, if the beneficiary is nearing age 30, and wants to reimburse themself for an expense of 3 or more years back, that would probably not be allowed if the IRS discovered it. This is different that an HSA account.