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Author: ushats Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 121149  
Subject: 529 withdrawal for rent, books Date: 1/5/2014 2:52 PM
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I searched the boards to see if this has been discussed before and did not turn up anything.Please direct me if it has been

I have a son in college and have some money in 529 and some in coverdale IRA
the 1 st year he stayed in the dorm and i got 1 bill from the university that included tuition, fees, room, board and i paid it directly from 529 account.

In the 2nd year he will stay in an apt. How do i keep paper trail of withdrawals . I know the amount of rent i can pay from 529 should be similar what the college dorm room costs.

Do i pay be credit card or from checking account and withdraw from 529/coverdale and pay to myself?

Similarly how do I keep paper trail for paying for books? pay be credit card and keep the receipt and withdraw from 529 and pay myself?

Sorry if i sound confused but i am
Thanks
usha
PS does not qualify for any grants, scholarships. i am doing FAFSA but have no hope
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Author: reallyalldone Big funky green star, 20000 posts Old School Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 119807 of 121149
Subject: Re: 529 withdrawal for rent, books Date: 1/5/2014 3:14 PM
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Here's the IRS stuff:
Expenses for room and board must be incurred by students who are enrolled at least half-time. The expense for room and board qualifies only to the extent that it is not more than the greater of the following two amounts.

The allowance for room and board, as determined by the eligible educational institution, 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 eligible educational institution.


For the first allowance, go to the college website and search for "cost of attendance" and the budget should come up and show the allowance for room and board.

For the paper trail, I would have a copy of the lease and proof of rent payment. On the tax side, you may want to read this:
http://www.irs.gov/uac/Tax-Benefits-for-Education:-Informati...

and

http://www.finaid.org/savings/taxbenefitcoordination.phtml

to be sure you are using benefits in the best way.

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Author: ushats Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 119808 of 121149
Subject: Re: 529 withdrawal for rent, books Date: 1/5/2014 7:09 PM
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Thank you for your response.So do I pay myself after i pay the rent and keep track of rent receipt and lease papers?
usha

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Author: TMFPMarti Big funky green star, 20000 posts Home Fool Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 119809 of 121149
Subject: Re: 529 withdrawal for rent, books Date: 1/5/2014 8:01 PM
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So do I pay myself after i pay the rent and keep track of rent receipt and lease papers?

It sounds like you think there's some sort of tracking required. There isn't. You can pay the expenses from your petty cash and spend the 529 distribution on Twinkies if you like. What matters is the reconciliation between the amount of qualified expenses, of which you need to keep proof in case you're audited, and the amount taken from the 529.

See Pub 970.

Phil
Rule Your Retirement Home Fool

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Author: ushats Two stars, 250 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: 119829 of 121149
Subject: Re: 529 withdrawal for rent, books Date: 1/11/2014 12:39 PM
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It does sound like that doesn't it? That is because of my understanding of distribution and tax liabilities.
I don't buy twinkies! but may be starbucks.
Thanks again
Usha

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