After the recent change in federal tax law, families with 529 college savings plans are now able to pay for private K-12 schooling with their accounts. Under the revision, families may withdraw up to $10,000 per year from 529 accounts to cover the costs. However, families in North Carolina are only advised to use their 529 accounts when covering costs that fall under Qualified Higher Education Expenses (QHEE), such as tuition, room and board, textbooks, computers, and additional fees. NC 529 Accounts free from state and federal taxation, so long as they are used for these higher education expenses. If NC families decide to use their plans for private schooling expenses prior to higher education, they could be hit with unfortunate tax penalties.
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