<p>Hello,</p>
<p>if tuition was overpaid and you request a refund of, say, $1000, how does this affect the students taxes, FAFSA, CSS profile and next years financial aid? Would this be considered income? Would this be considered gift? etc etc</p>
<p>Thanks again!</p>
<p>It depends. If your parents paid the tuition, nothing. If someone else paid the tuition, you may have report it as a gift on the following year’s FAFSA.</p>
<p>It was from my parents, my NCP’s 529 account and the refund is going into my bank account to be used for books, food and expenses related to college. I just don’t want to be hurt with financial aid next year.</p>
<p>Tuition, books, food and expenses related to college are qualified educational expenses for your (and your parents’) 529 Savings Plans.</p>
<p>So I don’t think you need to report anything on next year’s tax return or FAFSA. You just have to keep the receipts for tax documentation.</p>
<p>However, you also should consult a tax person on how to take money out of 529 plans.</p>
<p>The 529 institution will provide documentation of the withdrawl, which is reported on your tax return. You also report how much was used for qualified expenses, to avoid any penalties. The refund will be reflected in you 1098T which reports the tuition you paid for the year.</p>