Hello All,
My independent daughter is a grad student and is also working a full time job. I (as the account owner with her as the beneficiary, her SS# is on the 1099-Q) took a distribution from a Coverdell in excess of what was reported on 1098-T. This disqualified her from the Lifetime Learning Credit so we are looking for ways to increase her qualified education expenses. I understand she can split the Coverdell distribution into nontaxable and taxable portions and that does reduce her overall tax liability by allowing for the LLC.
However she is still paying tax on a significant part of the distribution. The objective here is to increase qualified expense to at least 10k above the Coverdell distribution leaving the tuition reported on 1098-T to claim the LLC and make the Coverdell distribution tax free.
Can she claim room and board expenses as a qualified expense against the taxable Coverdell distribution portion? (Not for LLC)
Thanks for any assistance.
Yes, all your info is correct. She can use room and board as a qualified expense for the ESA distribution. She can only count the months she was enrolled in class. The amount she can claim is limited to the lesser of her actual cost or the school's room and board allowance for attendance (essentially what the school charges on campus students). As a practical matter, "everybody" uses the school's R&B charge.
Books and computers are also qualified
expensesfor the ESA (but not for the LLC),
Yes, all your info is correct. She can use room and board as a qualified expense for the ESA distribution. She can only count the months she was enrolled in class. The amount she can claim is limited to the lesser of her actual cost or the school's room and board allowance for attendance (essentially what the school charges on campus students). As a practical matter, "everybody" uses the school's R&B charge.
Books and computers are also qualified
expensesfor the ESA (but not for the LLC),