<p>As I mentioned in another post I made, I'm doing some 529 planning. That post deals with supplies and equipment. In this post, I'm going to ask for opinions on room & board.</p>
<p>My daughter lives in an on-campus apartment. I know I can use the full housing fee we paid as an eligible 529 expense. However, she chose to purchase a minimal cafeteria meal plan (cost $665) so she can eat an occasional meal on-campus. She supplements that with food she prepares in her room as well as occasional visits to local fast-food places. Question: Are we limited to withdrawing 529 dollars that equal our out-of-pocket expenses from these various food sources? Or could we simply withdraw the COA figure the college uses for board.</p>
<p>My son uses the exact same meal sources as my daughter (including the limited $665 school meal plan)......however, he lives off campus. The college is telling me that we can use the school's COA figures for both housing & board since he lives off campus. Do you agree.....or do you think we are limited to the actual dollar amount that was spent?</p>
<p>I have all the credit card receipts.......so I could crunch the numbers. Obviously though it will be a big task (we have a 3rd child at another college), so I'd rather just use the COA figure for board. How do you think the IRS would view it if I was ever questioned about it?</p>
<p>You can use the COA number for food even if your child does not use the full amount on campus. The rules are burried somewhere in the IRS 529 documentation.</p>
<p>We used my D 529 for the COA numbers including her meal plan even while living in an off-campus apartment. As long as you can show that what you spent in 529 money is not greater than the COA. We were audited one year(IRS), because I forgot to file the 1099 for the 529 (stupid me), so i had to prove our 529 expenses and all I had were bank statements with Highlighted entries for the school bookstore, metro card expenses, payments made to the school which included tuition, room and board, not even actual receipts and they were satisfied with that.</p>
<p>The quote in post #3 from pub 970 left out a sentence:</p>
<p>“You will need to contact the eligible educational institution for qualified room and board costs.”</p>
<p>They could be on the school website though.</p>
<p>You mentioned you called the school about your son living off campus. I think the school was correct, you can use their COA numbers for off-campus living. Did they give you a number to use or is it on their website? To me, 3b in the quote implies you can only use actual amounts charged if living in university housing. For off-campus you have to use 3a.</p>
<p>Did you ask the school about your daughter? I would ask if they have a room and board COA number for those who live in the apartments. 3a says COA is by living arrangement. If not, the quote from pub 970 implies you could use the COA number for typical on campus living with the standard more inclusive meal plan or actual billed costs, whichever is greater. I don’t think you can include receipts from grocery purchases she makes due to being on a reduced meal plan. 3b says amount charged.</p>
<p>I agree with dadinator. I think you would use your actual expenses if they are less than the COA. That’s how I read it. Your 529 plan documents might spell it out more clearly than IRS Pub 970. I don’t think that you would have to have every single receipt for food expenses, but a reasonable estimate. Suppose the school has a COA figure of $2500 a semester for food. Suppose your daughter or son spent approximately $1300 plus the $665 meal plan. If you have receipts or bank statements or credit card statements or “contemporaneous records” for the $1300, you could figure $1965 of qualified expenses for food. (“Contemporaneous records” means that she wrote down the expense at the time, even if it was just scribbling “$4 coffee stand” on that date on a calendar. But, of course, it’s better to have an actual receipt.) But if your daughter or son spent $2600, you would be limited to the $2500 COA.</p>
<p>I wouldn’t use full COA for your son either. That’s how I see it – admittedly, a more conservative approach. Remember that you can always move 529 money from one child to another.</p>
<p>milkandsugar…“so i had to prove our 529 expenses and all I had were bank statements with Highlighted entries for the school bookstore, metro card expenses, payments made to the school which included tuition, room and board, not even actual receipts and they were satisfied with that.”</p>
<p>Thanks for telling me about that…I just finished an IRS inquiry into our 2010 tax return (re:529 plan)…never got to the detailed level you mentioned, but it’s good information to be aware of.</p>
<p>“We were audited one year(IRS), because I forgot to file the 1099 for the 529”</p>
<p>What? We’ve had a 529, and kids in college, for the past few years and I’ve never sent in the 1099 for the 529. I don’t recall reading that it is supposed to be sent in with the tax return. Never been audited, so far. (crossing fingers)</p>
<p>I had an inquiry on my 2010 return; one of the things they questioned was my Opportunity credit. They told me to send in copies of the bills from the college to prove what we paid. I have never submitted the 1099 the school sends us, but the IRS person I talked to said the information sent from the school was not sufficient. Our kids have 529 withdrawals, but we do not own the 529 and the checks go to the student, so that did not show up or it probably would have been questioned too. I used the COA for off-campus living for the 529 amounts.</p>
<p>I’m taking this IRS rule to mean that we can choose a more expense dorm option (double instead of triple room) and a more expensive meal plan than the basic one (he need more than 12 meals a week!!) and take the full amount from our 529 account. Is this correct? As long as it’s charged by the school we can go a “premium” route and take that amount from the 529, right? Thanks!!!</p>