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Regarding 529 - Plain and Simple - Is Room and Board a Qualifying Expense? We have been told for years to save in a 529 and the money withdrawn can be used for Tuition AND Room & board - Tax Free. Is that not the case? Turbo tax asks for the 1098-T, which only lists the Tuition portion of our student's expense, not Room & Board. The 1099-Q lists the total distribution which is essentially double the Tuition. Turbo tax is telling us that we have to pay tax on the entire earning portion of the distribution that we took for Room and Board. I'm I reading this correctly?
Thank you.
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Yes, room and board are qualifying expenses that can be paid with 529 funds. First enter the 1099-Q, under 529 distributions. Then enter educational expenses, at the ed expense section, including room & Board. TurboTax will apply it to the 529 distribution.
To get the screen to enter Room & Board, answer yes when asked if you paid for Books or Materials to Attend School?
For more information on what you can pay with 529 funds, see the following website: https://www.savingforcollege.com/article/what-you-can-pay-for-with-a-529-plan
Yes, room and board are qualifying expenses that can be paid with 529 funds. First enter the 1099-Q, under 529 distributions. Then enter educational expenses, at the ed expense section, including room & Board. TurboTax will apply it to the 529 distribution.
To get the screen to enter Room & Board, answer yes when asked if you paid for Books or Materials to Attend School?
For more information on what you can pay with 529 funds, see the following website: https://www.savingforcollege.com/article/what-you-can-pay-for-with-a-529-plan
Claiming Room and Board works for my undergrad daughter. However, when i make the same set of entries for my daughter in Graduate school, and select Yes for books, supplies, and equipment - there is no place to enter Room and Board as there is for my undergrad. Are the rules different for a full time grad student, or is there a problem with TurboTax?
These are two different educational credits. For your undergraduate student, she is eligible for the American Opportunity Credit, which allows Room and Board expenses to be applied. This is best educational credit to receive.
Your graduate student is only eligible for the Lifetime learning Credit. This credit does not offer the same flexibility as the American Opportunity Credit because Room and Board is not an eligible expense for this credit.
Please review this Turbo Tax link for more details..
Many colleges have closed dorms for the balance of the Spring 2020 semester and may be refunding a portion of room and board. If the room/board were billed in 2019 (for Spring 2020) paid with a 529 plan in 2019, but the credit is issued in 2020, how is that handled?
Under normal circumstances it would be an adjustment in 2020. But circumstances are not normal right now. This will have to be a wait and see what happens moment.
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