529 guidelines for room & board withdrawals?

JHS
Thu, 19 May 2011 10:18:09 +0000

If your daughter is at least a half-time student living off campus, room and board are qualified education expenses, but limited to the amount per semester that the college includes in its “cost of attendance” calculation for federal financial aid purposes. You should be able to get that amount from her financial aid award, or if there isn’t any then from the financial aid office (and possibly the college’s website, but I wouldn’t rely on that, since the COA for these purposes may vary if she is living off campus).

You should keep a record of her rent paid, especially if she is paying a roommate, or subletting informally. In theory, she should keep a log of her food expenses, too, because if her actual “board” expenses are less than the COA amount (after her rent is deducted), then she couldn’t take the maximum possible tax-free distribution. In practice, I’m not certain anyone actually does that. It’s hard to imagine the IRS going after someone without other abusive facts (like, she was living at home, not paying rent, and taking out the maximum for room and board).