What can CalKIDS funds be used for?
The funds in your CalKIDS account can be used to pay for qualified higher education expenses, such as:
- Tuition and related fees
- Books and required supplies
- Certain room and board costs
- Computer equipment
Where can CalKIDS funds be used?
CalKIDS funds can be used at eligible educational institutions nationwide and some abroad, including community colleges, universities, vocational and professional schools.
How should higher education institutions treat a CalKIDS distribution?
A distribution check from the CalKIDS Program is a scholarship from the State of California for a student attending an Eligible Institution. Distribution checks do not contain Section 529 monies.
California state law governing the CalKIDS Program, including information on qualified expenses, can be found in Education Codes 69996 – 69996.9. Examples of allowable expenses include tuition, fees, books, certain on or off-campus room and board costs, and computer and other required equipment for attendance.
As stated above, CalKIDS scholarships can be used for a wide range of higher education expenses. If a student does not have a balance at the Eligible Institution to apply the funds toward, the funds should be processed according to the institution’s guidelines and procedures on how to process scholarship funds in these situations where some higher education expenses may be incurred by the student outside of the institution.
Are CalKIDS distributions taxable?
Amounts in a CalKIDS account that are distributed to an Eligible Institution on behalf of a student generally should be federal, state and local income tax-free to the student if such amounts are treated as qualified scholarships under Section 117 of the Internal Revenue Code. Section 117 generally treats as qualified scholarships amounts used for tuition and fees required for attendance at an Eligible Institution and for fees, books, supplies, and equipment required for courses of instruction at an Eligible Institution. If CalKIDS account funds are used for any other purpose, including room and board, such amounts may be taxable. This should not be construed as tax advice. Individual circumstances vary and students should consult with their tax advisor regarding the tax implications of a CalKIDS account.