529 Expense Documentation

[Phroig]

I know that withdrawals for room and board are limited to the lesser of actual expense or the school allowance. Room charges are straightforward to document, especially since our charges for campus housing show up on the bursar's statement. What records should one keep for board? Keeping every single meal or grocery store receipt seems impractical, but is that what we need to be doing? Will a credit card bill that categorizes spending as restaurants or grocery stores suffice? What have you folks been doing?


Another (minor) question: Are there separate allowances for room and board, or does the one amount apply to the total?

 

[qwerty3656]

I'll be honest, I put 3 kids through college and never kept a tracking record of expenses. I'm sure if the IRS ever asked, I could go through visa statements, bank statements, etc and come up with a number pretty close to what I withdrew each semester.

 

[EastWest Gal]

When DS was living "off campus" the last two years of college, he purchased a meal plan from the college-I think two meals per day plus a few extra "dining dollars." He could use the 529 plan to pay for that. He didn't find it convenient to eat at the apartment, since he spent most of his time on campus and his college was ranked #8 in the country for quality of campus food.

You might want to google off campus and 529 plans. I believe there are limits to reimbursements. There may be separate allowances for room and board, because meal plans can be purchased separately from room expenses.

 

[ProspectiveBum]

I'll be honest, I put 3 kids through college and never kept a tracking record of expenses. I'm sure if the IRS ever asked, I could go through visa statements, bank statements, etc and come up with a number pretty close to what I withdrew each semester.

I have a kid starting college in the Fall, and assumed that I’d be using the housing and meal plan expenses. If I understand what you’re saying, withdrawals from a 529 are treated like an HSA, where it’s essentially on the honor system (until you get audited)?

 

[qwerty3656]

I have a kid starting college in the Fall, and assumed that I’d be using the housing and meal plan expenses. If I understand what you’re saying, withdrawals from a 529 are treated like an HSA, where it’s essentially on the honor system (until you get audited)?

Yes - the questions on the tax return are how much did you withdraw and how much of that was for qualified expenses.

 

[FlaGator]

As to food costs, look at the school’s published Cost of Attendance. There should a line item for meal plans. If your kid is eating on campus, pay for the meal ticket from the 529. If off-campus, withdrawing the cost of a seven day meal plan should be OK, and defensible if ever audited.

 

[Montecfo]

There was some guidance out there that we used, from FDA maybe? Or from the school or SavingForCollege. Rather than trying to document board directly.

Was not too worried as easier to document costs exceeded 529 balance but board expenses allowed us to reimburse more quickly.

 

[SecondCor521]

From IRS Pub 970 Chapter 8 (https://www.irs.gov/pub/irs-pdf/p970.pdf pages 51/52):

"Expenses for room and board must be incurred by students who are enrolled at least half-time (defined later).
The expense for room and board qualifies only to the extent that it isn't more than the greater of the following two amounts.
a. 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.
b. 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."

If you contact the financial aid office at the school, they should be able to provide you with the relevant numbers. I used that documentation from the school to justify my 529 withdrawals. Note that the COA numbers can differ based on the living arrangement of the student, so you need to get the right number for "living off campus" or "living off campus with parents" or whatever your student's situation is. The financial aid office people should understand the distinction.

I've never saved or had my student offspring save their grocery receipts because those are not mentioned in the above IRS publication as being relevant.

As you can see, the above IRS quote seems to imply that "room and board" are a single consolidated expense category. There may be cases where they're separate.

 

[retire2020]

I have been using estimates given by college for room and board for my daughter and not bothering to keep records of every receipt. If audited, I will submit print out from her college estimating room and board and mention that her actual expenses were greater than the school estimates…