Last week, we talked about 529 plans. Now, let’s go through additional resources that can be helpful when planning for -- and paying for -- college.

Financial Aid: If parents or teenagers are looking for financial aid for college, one important place to visit is the U.S. Department of Education’s Federal Student Aid website (studentaid.gov). It offers categories such as “Understand Financial Aid” (tinyurl.com/597reubt), which includes details on grants and work-study jobs, and “Apply for Financial Aid” (tinyurl.com/yj4yuyd6), which provides information about, and links to, FAFSA (Free Application for Federal Student Aid), a key component of the financial aid process.

Borrowing: If you are looking to borrow money for college, the Consumer Financial Protection Bureau (CFPB), a U.S. government agency, announced last year that it had added a new section, “Managing Your Student Loans,” to its Financial inTuition podcast section (tinyurl.com/vdcb92w5). The topics in the series include “Managing Student Loans and Money while in College” and “Postgraduate Degree Repayment Options.” The new category joins other CFPB podcasts, including sections on “Understanding Your Financial Aid Offer” and “Managing Your Money.”

Saving: Saving for College (tinyurl.com/3cf2d5fx), an independent firm, offers a host of resources, including a College Savings Calculator and an interactive map that details what 529 college savings plans are available in each state, along with what tax benefits (if any) the plans have. Among the articles found on the website is “How to Go to College for Free” (tinyurl.com/vb5ybys), a resource worth reading.

High school students: For high school students seeking more information about SAT testing and AP courses, there is the College Board (tinyurl.com/464sp4eu), a not-for-profit organization focused on helping students prepare for the transition to college.

Employers: When the Coronavirus Aid, Relief and Economic Security (CARES) Act became law in March 2020, one of its provisions allowed employers to make contributions of up to $5,250 per year toward eligible education expenses like tuition and student loan assistance, with the contribution not counting toward an employee’s gross taxable income. That benefit was extended to 2025 by the Consolidated Appropriations Act, 2021.

Loans: The U.S. Department of Education website also provides information on managing federal student loans (tinyurl.com/yks36vmr) for those who are paying them back. Through an additional extension of a relief policy in the CARES Act, principal and interest payments on federally held student loans have been suspended through at least Sept. 30, 2021, along with collections on defaulted loans. However, if you are in a financial position to pay back the loans, it’s a good idea to do so. After all, who wants to start a career with a lot of debt? As reported in 401(k) Specialist magazine (tinyurl.com/3zzs7se4) by Gregory Poulin, the CEO of Goodly, a provider of student loan and college savings employee benefits, 70% of college students who graduate each year begin their career with roughly $40,000 in education debt, which will take 22 years to pay off. That kind of debt can interfere with many other financial goals, including saving for retirement.

Taxes: The IRS provides important details related to the American Opportunity Tax Credit (tinyurl.com/593xabt9) and the Lifetime Learning Credit (tinyurl.com/478d4x52). Note that both higher education tax credits can affect the use of college-related plans like 529s, as you’ll need to avoid “double-dipping.” Saving for College provides insight (tinyurl.com/y29tk7rp and tinyurl.com/395ua35b), but you’ll also want to discuss this with your tax adviser.

The above list offers just some of the many resources available when it comes to paying for college. It’s worth doing some homework.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

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Are you a parent who is thinking about how to pay for your children’s college? Should you consider a 529 plan? Named after Internal Revenue Code Section 529, a 529 plan provides an opportunity to save for college in a tax-advantaged way. But caution needs to be exercised, since tax advantages disappear if the savings aren’t used to pay qualified education expenses (QEEs).

The best resource is IRS Publication 970 (tinyurl.com/u5f34pdc), which gives extensive details about qualified tuition programs, aka 529 plans. It describes QEEs as “expenses required for the enrollment or attendance of the designated beneficiary at an eligible educational institution.” A subset of QEEs, qualified higher education expenses (QHEEs), are “related to enrollment or attendance at an eligible postsecondary school.”

A perhaps friendlier resource is a Fidelity article, “How to spend from a 529 college plan,” at tinyurl.com/n2rbx7s. Fidelity, one of the world’s largest asset managers, is the program manager of the Connecticut 529 program called CHET (Connecticut Higher Education Trust).

I wish this could be easier, but spending can be a bit complicated. The key is knowing how to avoid a tax or a penalty, and keeping receipts.

According to Fidelity, the following expenses would qualify, but there are limits: tuition and related fees; books and supplies; computers and related equipment; room and board; and repayment of student loans. The limits on room and board, for example, have to do with whether the child is enrolled half the time or more, whether the amount is “included in the school’s cost of attendance for federal financial aid calculations” and what is “the actual amount charged if the student is living in housing operated by the educational institution.”

If your child is planning to live off campus, you need to go a little further. If the housing is “not owned or operated by the college, you can't claim expenses in excess of the school's estimates for room and board for attendance there,” according to Fidelity. That means that some homework is involved: Parents will need to find out the cost of room and board from the college’s financial aid office in advance.

As to books, only those that are required reading for the courses count. As to computers, as you might guess, “Computer software for sports, games or hobbies would be excluded unless the software is predominantly educational in nature,” according to Fidelity.

Bottom line: Keep track of QHEEs separately from other expenses. Keep a copy of published costs for room and board, etc., if your children are living off campus. Keep any documentation that will justify the expenditure as a QHEE.

When it comes to tax reporting, Rita Assaf, vice president of Retirement and College Leadership at Fidelity, explained that 529 account owners “receive a yearly 1099-Q form when they’ve taken a distribution from their account and must report that spending to the IRS in their annual taxes.”

She emphasized the necessity of keeping records and receipts to document that the money was spent on qualified educational expenses for the beneficiary.

The purpose of holding on to the receipts is to justify expenses if challenged by the IRS. As the Fidelity article points out, “If your withdrawals are higher than your QHEE, then taxes, and potentially a penalty, will be due on earnings that exceed your qualified expenses.”

The timing of your withdrawals is also important as they relate to a particular tax year. As Fidelity notes, “It’s important that the withdrawals you take from your 529 savings account match the payment of qualifying expenses in the same tax year.” Although that seems like a simple concept, delays resulting from issues like processing payments out of a 529 account or by the school, or payments being delayed in the mail, could cause issues. One solution for avoiding delays: Make the payments electronically (something colleges often prefer) from a bank or brokerage account, then reimburse yourself from the 529 account.

Next week, let’s talk about additional college resources.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

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Economic Impact Payments (EIPs) are still on the minds of my readers. The most common questions I’m getting have to do with payments that are lower than expected.

For example, here is R.B.’s story:

“I am a single 69-year-old retired man. I receive a monthly [Social Security] check in the amount of $1,852 and a pension in the amount of $4,028, totaling $70,560 yearly.

“I have all my bank statements dating from Dec 18, 2020, to March 17, 2021. They show that the only stimulus check I have received was one for $283.65 titled EIP2 on Jan 5, 2021.

“Would you have any opinion as to why only $283.65 has been the sum total since the beginning of the stimulus program? Please tell me how I should proceed.”

If you are in a similar position, you’ll want to turn to the IRS for answers. For some direction, you can call the IRS at 800-919-9835, a telephone line dedicated to EIPs.

You will be given instructions on how to proceed, or you can go directly to the IRS website dedicated to EIPs at tinyurl.com/ez3dsb8u.

There you will see that the IRS has in place a mechanism for you to check your EIP amounts based on eligibility requirements (more on that shortly); you can also check EIP payments for the third round by using the “Get My Payment” tool (tinyurl.com/um7wjjk9).

According to IRS FAQs, as a single filer, R.B.’s AGI (adjusted gross income) cannot exceed $75,000 to qualify for the full EIP2 of $600. In his case, his total income is $70,560, which should warrant the full payment. His AGI could be even lower than $70,560 if there are “adjustments,” such as educator expenses, student loan interest, alimony payments or contributions to retirement plans.

Could his AGI be higher than $75,000, which would justify a reduction in the payment to $283? Perhaps. Was any other income reported at tax time, perhaps from dividends, interest or capital gains, that pushed his gross income above $75,000? To find the answer, R.B. would check line 11 of his tax return -- Form 1040 or Form 1040-SR, which is an alternate tax form for taxpayers 65 or older.

If he’s above the maximum limit, R.B.’s EIP2 would be reduced “by 5% of the amount by which your AGI exceeds the applicable threshold,” quoting the IRS FAQ at tinyurl.com/54s4mapx.

Let’s assume R.B. qualifies for EIP1 or the full EIP2. He would claim the 2020 Recovery Rebate Credit (tinyurl.com/wv6euhbj), which covers both EIP1 and EIP2. The credit (if any) will be claimed through his 2020 tax return. Since he likely has already filed his 2020 return, he can file Form 1040-X, “Amended U.S. Individual Income Tax Return.” More details on Form 1040-X can be found at tinyurl.com/4c4azved.

What if you don’t normally file a tax return? According to the IRS, you must file a 2020 tax return to claim the Recovery Rebate Credit, even if you are not normally required to file one. Also, you will need to know the amount of any first and second EIPs you did receive.

As for EIP3, the IRS announced that as of May 12 (tinyurl.com/2chryffz), it had sent out a total of approximately 165 million payments, with a total value of $388 billion, since March 12.

Please continue sending your questions and comments to readers@juliejason.com. I look forward to reading them.

Julie Jason, JD, LLM, a personal money manager (Jackson, Grant Investment Advisers Inc. of Stamford, Connecticut) and award-winning author, welcomes your questions/comments (readers@juliejason.com). Please visit www.juliejason.com.

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