<p>Is anyone else playing for UMass out of a 529 savings plan? I called the University to find out what counts as a qualified education expense (which can be paid for with 529 distributions) and they said room and board doesn't count because it is not on the 1098 form. But typically more can be counted as qualified expenses for 529 withdrawals than is on the 1098 form. I'm going to call again tomorrow and hopefully speak with someone else. Anyone else have experience with this?</p>
<p>529 plans can be used for tuition, room, board, and even certain supplies. The 1098 form the school sends each year pertains to the $2500 annual tax credit in place through 2017, which is based on tuition only. Research this on the IRS web site because there are rules for using the tax credit in conjunction with qualified 529 expenses.</p>
<p>That’s what I thought, which is why I was puzzled that the UMass rep told me room and board wasn’t covered… perhaps he was confused. I’ll call back and try again.</p>
<p>There is no need to call them back. They don’t really have the expertise in these matters - they are not tax experts. It is up to the person paying the bills to know the rules about 529s etc. The university doesn’t get directly involved anyway. They just want you to send them the money. :)</p>
<p>The problem is proving it. We got a nasty letter from the IRS last year because we took out more from the 529 account than was listed on the 1098 form as qualified expenses - the difference was the room and board. So the IRS seemed to think the 1098 form was what counts as qualified withdrawals from a 529. We also had a 1098 form from Georgia Tech, which listed everything including room and board, so we got no hassle from the IRS on that one. UMass may not care, but it looks like they are the ones who come up with the number that defines the withdrawal amount permissible for a 529. I may have to pay a professional to figure this out, which I’m loath to do… there must be plenty of people out there going through the same thing with respect to UMass.</p>
<p>uriman, are you using a 529 to pay for UMass and have you had any IRS hassles?</p>
<p>OK, after calling the IRS I figured it out… they payee out of a 529 plan has to be the student or the institution or it triggers a 1099 being sent. I had paid myself and then paid the University. Big mistake.</p>