I thought one had to be a resident 12 months before starting classes. But it’s very possible that of the whole family moves to TX, then after 12 months residency, instate status would be granted.
No, the student can qualify if attending school during that year, if they meet all the requirements. Our son did that.
As I mentioned, I think the biggest obstacle is that the parents can’t provide more than 50% support for the student to qualify. It’s not enough just to not claim them on your taxes. It worked out for us because it was our son’s grandparents who paid his first year tuition. The form we filled out specifically stated the PARENTS couldn’t pay more than 50% so we were OK. We added my son’s name to the title on my parents’ house to satisfy the real estate requirement. We didn’t feel bad doing this since my dad had been a professor at UT for almost 50 years and volunteered a lot of his time for the benefit of the school.
And then there’s life. We went to all this trouble and then Son dropped out a week after the beginning of his sophomore year due to his mental illness. If your kid is doing well, remember to be very thankful.
1 Like
That’s great…if it is still the case.
As I said earlier, this parent needs to contact each college and get the info straight from the college. If it’s possible to establish instate residency, the college will know how to do so.
No you can start classes before the 12 months but you pay the OOS rate. Then after the 12 months you apply to the residency office for a change in status which includes uploading a lot of documentation over the past year such as title, utility bills, federal tax return, voter registration card, bank records and drivers license. There’s a whole form you need to fill out as well.
One difference from what @MaineLonghorn said which I think she referred to earlier when she said she thought it wasn’t as easy now as before (and she’s correct) is that title of the property has to be in the child name only. So this is why we can’t be owners along with my daughter or that siblings can’t be co-owners, etc. not sure what I would have done had my twins both ended up there. I may have had to wait an extra year and then transferred the property from one to the other which is what people do when younger siblings attend and why we initially kept it after year 1 - not knowing if my son might attend. Of course he didn’t even apply and then now this one is doing the one year Masters so she has 3 more years so we’ll just wait. My niece wants to go to UT so that may be the way to go.
Interesting, thanks for the clarification. Yes, my parents paid for the difference between in state and OOS tuition the first year for us. Very generous.
For purposes of the 50% support, if those funds come directly from the 529, is that considered sufficient and not coming from the parent?
You don’t report that information anywhere for UT, it’s only with regards for filing taxes. However, if the distribution is made to the student directly from the 529, then the student is the one who will receive the 1099-Q and have to answer the questions related to that on their Tax return, although it’s not reported as income in any case. But that’s the paper trail to show they’re the beneficiary and key. The 1098-T will go to the student regardless.
For the first year when the return is filed, so for example if a rising freshman is trying to gain residency for Fall 2022, then the 2021 tax return the student files they will click not a dependent but the student can’t claim the AOTC (american opportunity tax credit) for that year because technically for 2021 your student didn’t provide more than 50% of their support. At first you think, “yes they have” but then remember (as our accountant reminded us) that for the first 5 months of the year, possibly longer, depending on when your TX residency began, your student was still being supported by you. But the last part of the year, the dates in Texas they will be supporting themselves 50% of the time and by the time you apply for residency.
Hope that makes sense. If not, feel free to pm me. Happy to go over it with you and I can send you a link to the form you need on the UT portal and which documents to provide when the time comes. If I recall you can apply in the 11th month, but we waited until the 12th month just to be safe. We heard back about 8 days later.