<prompt> Human: I am just generally curious about 529 plan. I know you can get penalized for making a purchase unrelated to college, but how does the IRS know what I bought? Will they only know what I bought if the audit me? For what reason would they audit a 529 account?Thanks on advance to any responders.  <response>: Remember that penalties and interest are based on the tax change of an audit. If you accidentally charged a couple hundred dollars to your 529 that are illegitimate the tax change is in the tens of dollars. No bog deal just pay it if it e er comes up. If however you make a habit of doing this with large transactions that are recurring and have no relation to education, this is fraud and can even get you locked up. 