529 guidelines for room & board withdrawals?

MomCat2
Wed, 25 May 2011 12:59:01 +0000

You can use the 529 funds for his board plan, also for REQUIRED books, supplies and equipment.
“personal expenses” and transportation are not QEEs for 529 funds.
In situations where the child has a scholarship, I think (but not positve just how it works) that the penalty (and possibly even the tax) on 529 withdrawals for purposes other than QEEs can be be waived. I believe this is covered in IRS Pub. 970, but I’ve gotta run and don’t have time to look it up right now. Lots of good info in Pub. 970 - a must-read.

You are correct that the portion of the scholarship that covers room will be taxable. HIS tax return will be the one that shows his income (many threads here discussing this). Depending on how much other income he has (from jobs, interest, etc) in any given year, he may end up having little or no tax liability.