Author Topic: 529/Coverdell  (Read 2272 times)

newton

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529/Coverdell
« on: March 31, 2016, 04:01:20 PM »
Hello

Beginning next year I will have to start using a 529 and a Coverdell to help cover the cost of my child's college expenses.  My plan is to take a loan for the cost of the tuition.  Can I use the 529 and Coverdell to pay her off campus rent?  If so, what type of documentation do I need?

Thanks. 

Monkey Uncle

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Re: 529/Coverdell
« Reply #1 on: April 01, 2016, 03:42:41 AM »
Yes, you can use 529 money to cover rent, up to the amount you would have paid for on-campus housing.  You won't need to provide any documentation on your tax return, but you need to maintain records of the amount the on-campus housing would have cost and the amount of rent you actually paid.

GrOW

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Re: 529/Coverdell
« Reply #2 on: April 01, 2016, 04:47:56 AM »
Agree with Monkey Uncle. Get housing costs from the school. You can cover off campus rent up to the amount of the most expensive on campus housing. You also can cover rent + utilities up to the amount of on campus housing.

It can get a bit messy when your child is sharing rent with a few people and one person has this utility and another person has that utility but nothing that a simple excel sheet can't help you work out and document for your tax file.

Also, make sure that you don't are planning for tax credits as you begin to use 529 plan funds. You will want to have paid enough in school expenses from non-tax advantaged funds to get those credits.

This article by Fidelity is a pretty good one if you are looking for additional information - https://www.fidelity.com/viewpoints/personal-finance/college-529-spending

newton

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Re: 529/Coverdell
« Reply #3 on: April 01, 2016, 04:24:33 PM »
Yes, you can use 529 money to cover rent, up to the amount you would have paid for on-campus housing.  You won't need to provide any documentation on your tax return, but you need to maintain records of the amount the on-campus housing would have cost and the amount of rent you actually paid.

Thanks!  How can I find that information?  I assume it is on the college website?

newton

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Re: 529/Coverdell
« Reply #4 on: April 01, 2016, 09:34:09 PM »
Agree with Monkey Uncle. Get housing costs from the school. You can cover off campus rent up to the amount of the most expensive on campus housing. You also can cover rent + utilities up to the amount of on campus housing.

It can get a bit messy when your child is sharing rent with a few people and one person has this utility and another person has that utility but nothing that a simple excel sheet can't help you work out and document for your tax file.

Also, make sure that you don't are planning for tax credits as you begin to use 529 plan funds. You will want to have paid enough in school expenses from non-tax advantaged funds to get those credits.

This article by Fidelity is a pretty good one if you are looking for additional information - https://www.fidelity.com/viewpoints/personal-finance/college-529-spending

Excellent article.  Thanks!  Pretty much spells out everything I needed. 

Monkey Uncle

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Re: 529/Coverdell
« Reply #5 on: April 02, 2016, 04:32:31 AM »
Yes, you can use 529 money to cover rent, up to the amount you would have paid for on-campus housing.  You won't need to provide any documentation on your tax return, but you need to maintain records of the amount the on-campus housing would have cost and the amount of rent you actually paid.

Thanks!  How can I find that information?  I assume it is on the college website?

That's where I found it for my situation; I presume most colleges post that information.