Question

Mia participated in a qualified state tuition program for the benefit of her son Michael. She contributed $15,000. When Michael entered college, the balance in the fund satisfied the tuition charge of $20,000. When the funds were withdrawn to pay the college tuition for Michael, neither Mia nor Michael must include $5,000 ($20,000 - $15,000) in gross income.

A. True
B. False

Answer 1

The statement is true. The $5,000 difference between the contribution and the tuition charge does not need to be included in their gross income.

Step-by-step explanation:

The statement "When the funds were withdrawn to pay the college tuition for Michael, neither Mia nor Michael must include $5,000 ($20,000 - $15,000) in gross income." is True.

According to the information provided, Mia contributed $15,000 to a qualified state tuition program for the benefit of her son Michael. When the funds were withdrawn to pay for Michael's college tuition, the balance in the fund was $20,000. Therefore, the $5,000 difference between the contribution and the tuition charge does not need to be included in their gross income.