Question

The earnings from a qualified state tuition program account are deferred from taxation until they are used for qualified higher education expenses. At that time, the amount taken from the fund must be included in the gross income of the person who contributed to the account.

A. True
B. False

Answer 1

The earnings from a qualified state tuition program account are included in the gross income of the person who contributed to the account when they are used for qualified higher education expenses.

Step-by-step explanation:

The answer to the question is A. True.

A qualified state tuition program, also known as a 529 plan, allows earnings to grow tax-deferred until they are used for qualified higher education expenses. When the funds are withdrawn for education expenses, the amount taken must be included in the gross income of the person who contributed to the account.

For example, if a parent contributes to a 529 plan and later uses the funds to pay for their child's college tuition, the amount used from the plan would be considered part of the parent's gross income for tax purposes.