Clarification of 529 Qualified amount

Paying for College
1

So say I run a college’s NPC and get the following:
COA:

  • Tuition: $55,890
  • Room/Board: $16,160
  • Books/Supplies: $1,000
  • Transportation: $630
  • Personal Expenses: $1,320
    Total: $75,000
    Estimated Grant/Gift AID: $26,300
    Estimated NET Price: $48,702

Assuming those numbers translate into actual costs…

I believe my qualified 529 withdrawal amount would be:
COA: $75,000 MINUS
Grant: $26,300 MINUS
Disallowed Travel: $630 MINUS
Disallowed Personal Expenses: $1,320 MINUS
Disallowed AOTC: $4,000
EQUALS $42,750

So even though COA tuition/room/books was $73,050, I’m limited by the fact that the college tossed in some grant/gift money, correct? Then I have to back out all the unqualified stuff to arrive at my qualified withdrawal amount?

Thanks in advance!

2

Yes, that is correct because you are getting 1/3 of the COA as grants (gift from college), and you do not have to pay full COA 75k.
529 withdrawal is for what you actually paid the college.

3

@NCKris I didn’t think room and board were qualified educational expenses.

@BelknapPoint am I wrong?

4

Room and board are QEE for 529 purposes.

5

Ah thank you @BelknapPoint . I find this all so confusing. Room and board are not QEE for income tax purposes…right?

6

If you are asking about the education tax credits, correct. Room and board is only QEE for 529 purposes. Leave it to the IRS – multiple definitions for QEE.

7

Room and Board is absolutely a qualified expense, even off campus housing, if it is inline with college dorm cost.

8

Not exactly sure how “inline with college dorm cost” translates into a dollar amount, but as long as your costs are less than or equal to the schools COA for room and board, it will be considered qualified.