529 question- LIVE in on campus apartment but not using food plan

[yybunky]

If my son is living in a on-campus apartment as a senior and only has a small food plan as cooks and buys groceries. I understand the COA is the allowable amount for 529 (with receipts needed for audit). BUT what is the allowable COA if ON campus but in an apartment? The small food plan takes up a good chunk of the on-campus food amount, but the reality is he is mostly cooking, and the smaller food plan costs more. The off campus COA for food/board makes more sense. What are 529 limits for FOOD if in an ON CAMPUS apartment.

[Hal_Al]

Q.  What are 529 limits for FOOD if in an ON CAMPUS apartment?

A. There is no separate COA (Cost of Attendance) allowance for that situation. 

The situation is not specifically addressed in  Pub 970.  The conservative (and probably correct) approach  would be to use the  on campus allowance (the largest food plan for on campus students).  You use your actual cost or the food plan amount, whichever is less. 

[yybunky]

So to be clear, I thought auditors (or IRS, whomever flags this on 529 contributions beyond the  1098 T) would need to be less than the COA.  The COA that is used by the college seems to just be a number that is an average of costs- including housing and food- not the highest housing (and on-campus, apartments are higher than dorms) and not the highest food plan. I am not looking to be subject to a red flag here but also trying to withdraw and get reimbursed for what he is eating and cooking beyond a very small food plan. The difference between the college bill for the apartment and the small food plan is almost the amount of the COA total displayed on the college website. I am sure I am not the only parent where a student uses on-campus housing in an apartment but cooks most of the food themselves.  So how does this really work when it is submitted, and how much of these are really audited to have to worry about all of this when it is not like he is eating steak daily BUT it is more than the total COA displayed

[Hal_Al]

The IRS isn't flagging R&B against COA.  They have no way of knowing that.  They are flagging 529 distributions, in general because there is no form to submit showing your distribution is qualified (the TT work sheets are not sent to the IRS).  

At least two other users have reported receiving a CP2000 letter, from the IRS,  on 529 distributions. They replied that their child was in college and the distributions were for qualified expenses, which they listed, but they did not provide receipts.. They  later received a notices saying they were in the clear.

You say "BUT it is more than the total COA displayed".  In that case, you should limit your distribution to the COA.

[yybunky]

It is not more than TOTAL COA- it is more than COA displayed for Room and Board which are combined. There are plenty of other "misc expenses" so the COA is still higher in total. But It thought I need to stay within the COA category. Which is really wrong again as the costs are completely reasonable as still far less than off campus and really this is like off campus!

[Hal_Al]

I agree. I think you need to stay within the COA category.  If the COA does not post a separate number for board, them you need to limit  your total R&B to the school's COA for R&B, to be on the safe side.