OT - "qualified" expenses under 529

[dog12]

Does anybody have experience with paying for "qualified" expenses under a 529 plan?

Our daughter will be a first year at Virginia Tech in just a few days. We have some money in a 529 plan to help pay for her college educational expenses.

I just paid for the fall semester's charges, which included tuition, resident hall, dining plan . . . and several miscellaneous fees, which (I presume) are paid by all students.

Does anybody know whether these fees are "qualified" expenses under a 529 plan?

I've researched this question, and the best answer I've seen is the following: if all students pay the fee and payment of the fee is required to be enrolled at the school, then the fee is a "qualified" expense under 529.

Does anyone have experience where some fees were "qualified" and other fees were not?

Any help/guidance would be greatly appreciated.

Different 529 question: we bought a laptop for use at college. I know the laptop is a "qualified" expense, but what about the $81 in sales tax that I paid to get the laptop? Is sales tax to buy a laptop (or, books) a "qualified" expense?

Disclaimer: this entire discussion is not legal/financial advice and is purely for entertainment purposes.

 

[dawgman42]

Some good guidance on what is a qualified expense.

It can be nebulous, though. I'm on kid 3 of 3 with 529 plans, and if it involves tuition, course fees, books, software/computers, room, or board, it's qualified. I've always made sure what I've withdrawn from each kid's 529 Plan sums up to and equals the amount of all these things.

The hardest thing I've had to do is force the kids to send me PDFs of major payments they've made so I can make sure the school isn't effing something up. The first two boys went to State, but the daughter is at Sam Houston. Each school finds ways to make tracking the funds more and more painful from year to year.

 

[patdog]

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, defined later.

1. The following expenses must be required for enrollment or attendance of a designated beneficiary at an eligible postsecondary school.
   1. Tuition and fees.
   2. Books, supplies, and equipment.
2. Expenses for special needs services needed by a special needs beneficiary must be incurred in connection with enrollment or attendance at an eligible postsecondary school.
3. 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.
   1. 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.
   2. 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.
4. The purchase of computer or peripheral equipment, computer software, or Internet access and related services, if it's to be used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible postsecondary school. (This doesn't include expenses for computer software for sports, games, or hobbies unless the software is predominantly educational in nature.)
5. The expenses for fees, books, supplies, and equipment required for the designated beneficiary’s participation in an apprenticeship program registered and certified with the Secretary of Labor under section 1 of the National Apprenticeship Act.
6. No more than $10,000 paid as principal or interest on qualified student loans of the designated beneficiary or the designated beneficiary’s sibling. A sibling includes a brother, sister, stepbrother, or stepsister. For purposes of the $10,000 limitation, amounts treated as a qualified higher education expense for the loans of a sibling are taken into account for the sibling and not for the designated beneficiary. You can’t deduct as interest on a student loan (see chapter 4) any amount paid from a distribution of earnings from a QTP after 2018 to the extent the earnings are treated as tax free because they were used to pay student loan interest.

 

[stateu1]

You have a zero percent chance of it ever getting looked at. Don’t stress over it.

Plus, I’m sure that the cost of the tuition alone will be enough to justify what you withdraw from the 529.

 

[Colonel Angus.sixpack]

You have a zero percent chance of it ever getting looked at. Don’t stress over it.

Plus, I’m sure that the cost of the tuition alone will be enough to justify what you withdraw from the 529.

^^^^This. I’m on kid 3 with a 529. No one has ever asked or will ask and I’ve played it by the book.

 

[MSUGUY]

Room and board, very broad definition. As long as you don’t spend more than what the school says it costs to go there.
for example msu says yearly cost is about $20,000. Don’t go over that or something crazy like a Carnival cruise.

 

[GloryDawg]

Room and board, very broad definition. As long as you don’t spend more than what the school says it costs to go there.
for example msu says yearly cost is about $20,000. Don’t go over that or something crazy like a Carnival cruise.

20K doesn't buy as much beer and pizza as it used to. ******

 

[dog12]

You have a zero percent chance of it ever getting looked at. Don’t stress over it.

Plus, I’m sure that the cost of the tuition alone will be enough to justify what you withdraw from the 529.

I agree. Why would the IRS want to audit expenses paid via 529s?

I've decided to deem all of the miscellaneous fees and the sales tax paid for the laptop as "qualified" expenses.

I'll let y'all know if the IRS comes after me.

 

[dog12]

20K doesn't buy as much beer and pizza as it used to. ******

Ain't that the truth?

I specifically remember buying a case of Miller Lite from Sack 'n Save for $10 back when I was at State.

Today, a case of Miller Lite is $26.

 

[patdog]

One note on education tax benefits. Qualified expenses for every tax benefit are different. You'll generally be best off using tuition and fees to offset any scholarships or for one of the tax credits. And then use things like room and board and a computer for 529 plan distributions. Room & board is the lesser of actual costs or the school's published room & board rates, so check the rates. Everything you need to know is in IRS Publication 970. Also, you can't use the same expense for two different tax benefits. So, if you've already used tuition & fees for a tax credit, you can't use it again for a 529 distribution.

2023 Publication 970 (irs.gov)

 

[The Peeper]

Ain't that the truth?

I specifically remember buying a case of Miller Lite from Sack 'n Save for $10 back when I was at State.

Today, a case of Miller Lite is $26.

You should shop elsewhere

 

[The Cooterpoot]

Ain't that the truth?

I specifically remember buying a case of Miller Lite from Sack 'n Save for $10 back when I was at State.

Today, a case of Miller Lite is $26.

I've got a receipt from 1993 for a case of Miller Lite for $10.99 purchased at K&B in Laurel, MS framed at my camp house bar.

 

[The Peeper]

Look at Mr Money Bag$ here, I never bought anything at K&B in Laurel but Mickey Big Mouths, Schaeffer and Pearl. K&B was the place for bargain beer for sure. You could sit in that parking lot on Saturday nights and see all the bootleggers stocking up their trunks with beer to sell on Sundays. Then they would leave there and go to the liquor stores and stock up there. I knew one that sell liquor by the ounce, if you walked up with a 12 oz Coke bottle he'd sell you 12 ounces with a funnel pouring it in the top

 

[patdog]

Look at Mr Money Bag$ here, I never bought anything at K&B in Laurel but Mickey Big Mouths, Schaeffer and Pearl. K&B was the place for bargain beer for sure. You could sit in that parking lot on Saturday nights and see all the bootleggers stocking up their trunks with beer to sell on Sundays. Then they would leave there and go to the liquor stores and stock up there. I knew one that sell liquor by the ounce, if you walked up with a 12 oz Coke bottle he'd sell you 12 ounces with a funnel pouring it in the top

Ice House just off Ellisville Blvd. near the I-59 underpass. Got my car detailed by a guy who had an old service station under the interstate a couple of years ago. That warehouse and dock that looked so big and intimidating back then looked a lot smaller today.

 

[The Peeper]

Ice House just off Ellisville Blvd. near the I-59 underpass. Got my car detailed by a guy who had an old service station under the interstate a couple of years ago. That warehouse and dock that looked so big and intimidating back then looked a lot smaller today.

Ice house was the coldest beer, anywhere and they made a killing on USM students on Sunday afternoons because at that time Hattiesburg was dry on Sunday, at least part of my youthful years it was

 

[Villagedawg]

Ain't that the truth?

I specifically remember buying a case of Miller Lite from Sack 'n Save for $10 back when I was at State.

Today, a case of Miller Lite is $26.

Rich kids!*** I always went for the Milwaukee's Best (The Blue Shield). I think it was $6-$8.

 

[HRMSU]

Rich kids!*** I always went for the Milwaukee's Best (The Blue Shield). I think it was $6-$8.

You could literally drink yourself sober with that stuff ***

 

[dorndawg]

In the early 2000s, at the BP on HWY 12 towards walmarts you could get a 6pk of Southpaw tallboys for 2.99 or a quart can of High Life for .99 cents, provided you said "Yes mam" when they asked if you were old enough.

 

[Dawgbite]

Ain't that the truth?

I specifically remember buying a case of Miller Lite from Sack 'n Save for $10 back when I was at State.

Today, a case of Miller Lite is $26.

Just a FYI, Scruggs Farm Supply in Tupelo has had Miller High Life's all summer for $18 a 30 pack. I've been living the High Life for months now.