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PaulGerard
Returning Member

529 Student or Parental Support?

I'm 23 , full time student in 2021.  Graduated in December.  Filing myself with turbotax.  Not claimed as a dependent by parents.    I used my 529 withdrawals for rent and tuition.  Can I considered that as part of my own support, or is it parental support?

2 Replies
ColeenD3
Expert Alumni

529 Student or Parental Support?

It seems to be the stuff of debate. Please see this LINK to help determine the case. It gives this quote from Journal of Accountancy.

 

"The IRS has not given guidance on how distributions from Sec. 529 plans affect the support tests. These distributions can be substantial. If the distribution is counted as support provided by the beneficiary (child), it could prevent the child from qualifying as a dependent. Sec. 529 plans allow the owner (usually a parent or grandparent) to change the beneficiary. This provides some support for the argument that Sec. 529 plan distributions should count as support from the account owner and not count as support provided by the child, but tax practitioners are still waiting for a definitive answer from the IRS."

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Hal_Al
Level 15

529 Student or Parental Support?

 The treatment of expenses paid with distributions from Sec. 529 plans and Coverdell ESAs in the support test is uncertain because of the dual nature of these college savings vehicles and a lack of IRS guidance. The consensus among tax experts is that it is parental support, because the parent is the owner of the plan.  

 

If you want to claim it's your own support, It would be helpful, to your case, if the  distribution was  to the the beneficiary or school, rather than the owner. 

 

Another reference (which says basically the same as the other one):  https://www.savingforcollege.com/articles/the-impact-of-529-plans-on-claiming-a-dependent

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