I’ve paid for my daughter’s entire room/board for the 2018/2019 year in 2018. Will the IRS question this as the payment should be made during the same year the expense was incurred? So should I have paid semester by semester rather than one payment for the school year?
That’s not how the rule of thumb works. This is what you need to know: the distribution from the 529 account needs to be taken in the same calendar year that the corresponding expense is paid. When the expense was incurred is not a prime consideration.
Great thanks that helps…
One more question. I think I took too much from a distribution for my daughter’s college tuition payment in 2018 (there was a prepaid deposit which may have been paid and the distribution taken in 2017 for this deposit)…can I deduct this deposit amount from a future distribution? Or can you “pay back” a distribution which should not have been taken?
Read chapter 8 of IRS pub 970 to get some basic information, and then come back here if you still have questions.
Ok thanks! I also am trying to figure out what “supplies” mean for qualified expenses for post secondary education…does that refer to pens/papers/notebooks, etc? Can the expenses for that be taken from the 529 plan?
Supplies are required equipment for classes, not pens and paper. One of my kids had needed lab goggles and apron for chemistry, and the other a yoga mat and pillow for an acting class. Very specific items required for the courses. Other things could be a graphing calculator, paints, make up for theater, and material for a 3D printer.
Your 529 administrator may allow, but I’ve not heard of any allowing basic pens and pencils.
It’s not up to the 529 plan administrator to “allow” expenses as qualified or not; that’s what the IRS does.