2 Comments

  1. the tax lady
    Posted December 8, 2009 at 7:31 pm | Permalink

    Transportation does not count. It’s not tuition, room or board.
    So if you spend the money on a car, the money is both taxable and subject to a 10% penalty. (This does not apply if it’s a regular savings account, UGMA or UTMA.)
    As for a special needs trust, contact the trustee. A very conservative trustee will probably limit you to tuition, room and board.

  2. scottsmy
    Posted December 8, 2009 at 8:34 pm | Permalink

    You need to be more specific with the kind of account you have. However, you will be taxed if it is any kind of tax deferred account such as a 529.

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