529 - off campus programs

Parent Cafe
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Ok - this will seem a bit petty or small given the potential small dollar amount but given I’ve overfunded the 529, every dollar I pull out is welcome.

My daughter attended the Washington DC program this semester via her school. Technically it was not via her school as all the colleges in her state go through the state flagship’s Honors College.

Long story short, tuition and room (but not board) were $16,242 but we received back from my daughter’s school $18617 or $2375 more than paid.

Here’s where my question comes in.

The DC program estimates food for the semester at $4200-$5200. Honestly I didn’t track actuals although I could from the credit card bills. .

Normally I take the $ amount that her school lists for these purposes - this year it’s $2957 for the year or $1478.50 per semester. That’s in Charleston. I know I can’t claim housing as that’s been accounted for in what was paid and what was refunded.

If I use my daughter’s college # for an off campus student ($1478 for the semester) I can’t claim anything as our scholarship was more than that in refund to us.

But if I used the minimum estimate from the program she was in - $4200 (I don’t think I’d want to go higher), and we were given $2375 back, then I could withdraw $1825 from the 529. Not a ton but better than nothing.

My concern is the 1098T - factors in all this stuff to determine if there’s a tax liability. The $4200-$5200 food estimate is on a document from the DC program - seems very informal, not official. And not from her school.

I’m inclined to not claim for the semester but given I’m overfunded, every bit I can take out helps.

Hopefully what I wrote makes sense.

If she were at school and not in DC, it’d be an easy no.

I don’t know how it works if you’re not at school and I don’t think there’s an official COA.

What would you do ?

Thanks for any feedback.

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We were very conservative regarding what we withdrew from the 529’s, and most likely withdrew less than we could have in some cases. The result was that we ended up with two kids with bachelor’s degrees in hand, with a bit still left in one of the 529s.

We then just waited until older sister started a mostly unfunded graduate program. She is now 5/8 of the way through a DVM, and the 529s are finally gone.

This is not that bad of a problem to have.

Is graduate school likely for any child? While PhD’s are usually fully funded, many other graduate degrees are not.

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Not sure about all the ‘ penalty-free non-qualified withdrawal options’, but I intend to roll over to grandchildren after grad school and stuff. They can use 10k per year for k-12. I’m pretty far away from grandkids but still…

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Thx
I’ll likely have further use. Two mbas in the house from the parents. I’m guessing they’ll be more schooling although my daughter tells me how tired she is of school.

Looking more at the legal aspect.

The schools send 1098 T and I think if your withdrawal exceeds what it shows the tax owed goes up vs staying flat. I’ve been using the school housing/board estimates on the COA in the past as rent alone exceeds it but I believe that’s the max you can claim.

I’ve been conservative. Heck one year I took nothing. Markets were too low and I’ve had the fund invested further out like my kids were 10 years out so it wasn’t conservative.

But I would like to pull out every cent tax advantaged.

Some say you can take out the scholarship amount but on that you lose the advtg.

Just trying to maximize if possible.

Next summer when she does study abroad - will be another good chunk hopefully.

What’s throwing me off this time is the off campus program. Which estimate do you use - the home school or the special program’s - which isn’t written on a COA but rather a program flyer.

Thanks

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@BelknapPoint can elaborate, but the 1098T sometimes does not show your actual expenses. For example, it doesn’t show any out of pocket qualified expenses you have incurred. The 1098T is only part of the picture.

I’m sure @BelknapPoint can tell you more, as can @Mwfan1921 but be patient. For many, this is a holiday weekend.

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Yeah. I play on turbo tax which is why I said that. The main concern here is she goes to Charleston and that’s who gave her the scholarship $$ but we paid U of SC for the semester.

And because it was an off campus program, who determines the board to use and is it from Charleston or Columbia - where she wasn’t - or DC which set an estimate.

It’s never easy :slight_smile:

I’m likely to take the $1800 to see. Worst case is I pay some tax. It’s a small experiment.

But if I should take nothing, I’m ok with that - just blessed that the overall cost was minimal regardless.

Maybe I’ll play on TurboTax tonight. I’m not home to look on my 1098T but there’s a few boxes and I think you can figure out the most to claim. But I need to do a withdrawal this week (same year) to stay compliant.

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Update - I just found out the letter with all the $$ which estimated $4200 to $5200 for dining came from U of SC to College of Charleston.

Perhaps for Charleston to do the 1098.

I guess the home school requested it b4 determining the scholarship.

I think I’ll play it safe and not request anything. We are already well ahead financially and life given she loved her semester and had so much exposure in such a zany time.

Much thanks for everyone’s insights.

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Don’t count on the 1098-T to by itself give you accurate numbers for figuring out qualified 529 expenses. It won’t show you all of them (books, for example, as pointed out by thumper1) and even the numbers that are on the 1098-T are notorious for not lining up with qualified 529 expenses. The form is really designed to help taxpayers claim educational tax credits.

If the estimated board numbers for the Washington semester came from an official school source, I personally wouldn’t have a problem using the lower range to justify a qualified distribution from the 529, especially if I thought I would have 529 dollars left after graduation and little chance on spending the excess funds on other qualified expenses down the road.

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OK - appreciate it.

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