When paying for things other than tuition ( private apartment, computer) is there a set amount allowed to be used for these things? What kind of records does one need to keep?
If there is too much money in a 529 I know beneficiary can be changed to a sibling. Can it also be changed to a first cousin?
You can name whoever you as beneficiary of a 529. If you want to give your money to a niece or nephew, go ahead. Understand, though, the the amount of a 529 will need to be listed as an asset on FAFSA regardless of the named beneficiary.
A college has several COAs. Student living on campus, student living with parents, student living off campus. You can use the COA’s amount for housing or you can save receipts.
Thanks @ordinarylives! Do I need to get something from the college to show COA in terms of record keeping?
As for the cousin, I’m talking about transferring the 529 from my child to my neice. Can one do that without triggering tax consequences? The FAFSA issue isn’t relevant for us. No one will get financial aid.
@BelknapPoint can you clarify? I thought that the housing paid with a 529’could NOT exceed the cost of housing on campus. In other words, if the student decided to live in an apartment with a doorman on 5th avenue, and such…the extra cost could not be paid with the 529 and “count” as an allowed expense.
You can name whoever you want as a beneficiary when establishing a new 529 account (well, there are certain restrictions), but under IRS rules you can only change the beneficiary of an established 529 to a “family member” of the original beneficiary. The IRS does consider a first cousin to be a “family member.”
Not true. If OP changes the 529 beneficiary to a niece, the niece will not report the 529 balance as an asset on her FAFSA, because it is not an asset owned by the niece or her custodial parent(s). Any distributions from the 529 for the benefit of the niece must, however, be reported as untaxed income to the niece in the year of distribution.
It would be a good idea to print out and file away the school’s COA for the year and living situation in question, just so you have it for the record.
As per IRS pub 970:
*The expense for room and board qualifies only to the extent that it isn’t more than the greater of the following two amounts.
a. The allowance for room and board, as determined by the eligible educational institution, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student.
b. The actual amount charged if the student is residing in housing owned or operated by the eligible
educational institution.
You may need to contact the eligible educational institution for qualified room and board costs.*
https://www.irs.gov/pub/irs-pdf/p970.pdf
There is no set, published limit for computer equipment, but any expense should be reasonable. It is advisable to keep receipts so that the purchase amount can be confirmed.
Thank you @BelknapPoint !!