I have XXX in my 529 fund, and my parents want to drain as much of it as they can since they over funded it (sister decided not to attend college).
What little things can I spend it on? I know I can pay tuition and R&B, so there were a few items I was wondering about.
ACT scores for the school I am attending in the fall.
Application fee.
Enrollment fee.
Housing application fee.
Textbooks.
A few larger questions:
What is the price of R&B I can expense? On campus housing can vary from 11-17k depending on the room at the school I’m looking at, so can I only expense the lowest amount and have to pay out of pocket for the rest?
I received a scholarship for about 10k total. I’ve read that I will be able to take that money out of my account without penalties, but will have to pay capital gains on the 10k? My parents don’t want to be taxed, so they’d rather keep the 10k in there in anticipation of grad school rather than paying tax on any capital gains made. (Would it be smarter to withdraw the funds under my name for a lower tax bracket, or would I be taxed on my parents bracket?)
Do I have to fill out any paper work to make sure I’m not taxed? I doubt the government will just take my word saying the withdrawals were 100% for college purposes.
You’re only taxed on the earnings on the amount you withdraw if you got a scholarship, not on the whole $10,000.
When it comes to room and board, the costs can’t exceed the greater of the following two amounts:
– The allowance for room and board included in the school’s cost of attendance for federal financial aid calculations
– The actual amount charged if the student is living in housing operated by the educational institution
@AroundHere@patsmom Very helpful information form the both of y’all, thank you.
Is there a time restriction on when you can take out funds? I have been taking dual credit courses for two years, and I’m wondering if I’d be able to expense the book purchases from past years (all the way back to late 2015…).
My sister attempted community college, but she ended up dropping the courses. We paid for book for all of her classes, so can we use the money for books? I’m hesitant because she didn’t end up finishing the courses, and she only took 6 hours which would make her part time.
EDIT: Also, what is the policy on purchasing a laptop?
Does this mean I can buy any laptop I want, i.e. a top of the line 2500$ computer, as long as I take notes on it?
Everything I googled before finding the IRS Publication 970 pretty much said a computer is not a Qualified Educational Expense.
I thought it’d be smarter to just call my 529 company to find the answers lol.
1.The laptop part was added late 2016, so now students can use their 529 to purchase a laptop for schooling purposes.
2. I will be able to withdraw the 10k with tax on the earnings of the amount. They said if I withdraw the money under my name, the tax rate will be my tax rate rather than my parent’s higher rate.
3. The enrollment fee is able to be paid by the 529 since it is mandatory for enrollment.
4. ACT and application fees is getting a little too close to the lines lol. Not withdrawing money for that.
5. Textbooks are paid by 529 as long as they’re required.
6. 529 will cover whatever amount the school charges for R&B. Will cover between 11k-17k, depending on the room.