If the option for "room & board" does not appear under "Additional Educational Expenses" in Turbo Deluxe where do I enter these expenses then?

[jjrmthompson]

I need to add the R&B expenses for my daughters off campus housing that is paid for out of her 529 account.  I have looked at similar questions but when I click on "other additional expenses" I am not given the option for R&B.   I just get books and materials required and not required by the school.  Where am I to enter these expenses?

[KrisD · Accepted solution]

You don't. The program has you enter the expenses that are eligible to be used for education credits. Room and Board is not an eligible education expense for any tax credits, but is considered a Qualified Higher Education Expense for the 529 distribution. It is not very often that the IRS requires a tax form NOT be reported, but if the 529 distribution was used for qualifying Room and Board costs, simply keep receipts for that payment and the 1099-Q from the 529 distribution with your tax file. 

According to the IRS:

“Tax-Free Distributions

Generally, distributions are tax free if they aren't more than the beneficiary's adjusted qualified education expenses for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return.”

Expenses taxpayers can use for the education credits are different than the expenses that can be used for 529 distributions and certain scholarships. If applied to a 529 distribution, the distribution is tax-free. If applied against a scholarship, the scholarship is considered taxable income to the student. 

According to the IRS:

“Qualified Higher Education Expenses

These are expenses related to enrollment or attendance at an eligible postsecondary school. As shown in the following list, to be qualified, some of the expenses must be required by the school and some must be incurred by students who are enrolled at least half-time.

The following expenses must be required for enrollment or attendance of a designated beneficiary at an eligible postsecondary school.

Tuition and fees.

Books, supplies, and equipment.

Expenses for special needs services needed by a special needs beneficiary must be incurred in connection with enrollment or attendance at an eligible post-secondary school.

Expenses for room and board must be incurred by students who are enrolled at least half-time (defined below).

The expense for room and board qualifies only to the extent that it isn't more than the greater of the following two amounts.

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.

The actual amount charged if the student is residing in housing owned or operated by the school.

You may need to contact the eligible educational institution for qualified room and board costs….”

Education credits, 529 distributions and the school loan interest deduction can be a complicated subjects. Please read IRS Pub 970 for more information. 

CLICK HERE for IRS Pub 970 Education Credits

[t2121]

I  am living off the campus. Should I keep all receipts for room and board such as: grocery, utilities, rent, etc? My ACTUAL expenses won't exceed the one allowed by school: room and board expenses for living on campus are $4350 per term, my actual expenses are about $3800. It is hard to keep all receipts since we have shared expenses for housing and food with my 3 other roommates.