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New Member
posted Mar 3, 2021 12:52:07 PM

Are 529 distributions considered self-support by the student or parent support for the purposes of determining eligibility as a dependent?

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4 Replies
Level 15
Mar 3, 2021 1:05:53 PM

Simple answer: 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. 

References:

 

https://www.savingforcollege.com/articles/the-impact-of-529-plans-on-claiming-a-dependent

http://www.aicpa.org/publications/taxadviser/2010/august/pages/nichols_aug-2010.aspx

Expert Alumni
Mar 3, 2021 1:06:47 PM

It depends on what the 529 Plan funds were used for.  If the 529 plan funds were used to pay for tuition and books, then it wouldn't count as support.  If it was used to pay room and board, then it would be considered support.  Unless the student owned the 529 plan, it would not be considered as support provided by the student.  

New Member
Mar 4, 2021 1:22:07 PM

If the 529 distribution is paid for tuition and books it counts as support for the student if distributed to the student?

Level 15
Mar 4, 2021 1:31:09 PM

@mhgoodall 

There is no definitive answer to that question (see above). But, the probable answer is no. 

The consensus among tax experts is that it is parental support, because the parent is the owner of the plan, regardless of whether the student or the parent is the "recipient" of the distribution.  

 

But, if your are going too try to claim that as student self support, it would be better, for your case,  if the distribution was sent to the student.