My mother-in-law has a 529 plan for my son. He is going to be living in a rental house off-campus with three other students this year. Can he use the 529 plan to pay for his portion of the rent, food and utilities?
Yes, but not necessarily the full cost. As long as your son is enrolled at least half-time in a degree program, room and board qualify as eligible expenses to be covered by tax-free withdrawals from the 529 plan. But the maximum amount permitted for off-campus living cost is the amount the college cites as the off-campus room-and-board figure for federal financial aid purposes. Ask the college's financial aid office for the number it reports to the Department of Education.
Utilities and other reasonable living costs can be included, says Joe Hurley, of SavingforCollege.com, as long as the total doesn’t exceed the school’s official room-and-board figure.
Sign up for Kiplinger’s Free E-Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
For more information about using money from 529 plans and other accounts for college expenses, see Take Advantage of Education Tax Breaks.
-
-
Hobby Income: What It Is and How It’s Taxed
Hobby income isn’t subject to self-employment tax, but will the IRS consider your hobby a business?
-
Colorado State EV Tax Credit Will Soon Soar to $5,000
State Tax Breaks Colorado will offer a big tax break soon for resident taxpayers who buy electric cars and trucks.
-
College 529 Savings Plans: What You Need to Know
529 Plans Do you know how much you’re able to contribute or what the funds could be used to pay for? Check out the nitty-gritty details of this formidable college savings tool.
-
3 Key Ways You Can Help a Child or Grandchild Pay for College
college Options such as 529 plans, education savings accounts and tax-free gifts can ensure you don’t carry a child’s student loan debt into your golden years.
-
Grandparents: Now is the Time to Contribute to Your Grandkid's 529 Plans
529 Plans With new changes to the FAFSA process, you can “superfund” their college savings – without affecting their financial aid status.
-
Saving for College? Everything You Need to Know About 529 Plans
529 Plans 529 plans offer considerable convenience and potential tax savings when putting money aside for education. That said, there are still a range of rules you’ll need to know (and follow).
-
School’s Out for Summer … But Tuition Is Back in the Fall
Paying for College Giving the gift of education never goes out of style. Here are some different options for helping out the young person in your life.
-
States Boost 529 Plan Incentives
529 Plans Many states provide a tax break for residents, and now they're offering matching contributions and other perks.
-
When Choosing Funds for Your College 529 Plan, Don’t Make This Mistake
529 Plans Age-based funds make sense for some retirement savers, but they rarely make sense for college savers, in my opinion. Here’s why.
-
The Coronavirus-Caused 529 Plan Tax Risk You Can't Ignore
529 Plans With the coronavirus canceling college classes, you could be due a refund. But if you used 529 plan withdrawals to pay for tuition or room and board, you could be hit with a tax bill if you don't take this action within 60 days.
