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)
- She lives in an off campus apartment that she pays for, along with all the other expense that come with living on her own (food, internet etc...)
- On her 1098-T, box 8 & 9 (At least halftime / grad student) are checked
- She lives with a roommate so it seems logical only her half of room and board would be "qualified"
- I assume it would only apply for the months she was enrolled in class.
- Publication 920 on page 50 indicates off campus room and board is a qualified expense provided it is less than "The allowance for room and board, as determined by the school, that was included in the cost of attendance (for federal financial aid purposes) for a particular academic period and living arrangement of the student."
Thanks for any assistance.
