You may know that room and board is a qualified expenditure for 529 College Savings Plans, but did you know off-campus housing qualifies as well?
Housing expenses are considered a “qualified higher education expense” according to Internal Revenue Code (IRC) 529. For many, the first two years are the easy years. Your child stays on campus housing and you make one lump payment to the school from your 529 account. But what if your child decides to move to off-campus apartments to stay with their friends?
You are still able to use those funds you have saved in the 529 account within the limits. Here is what you need to know:
- Your student must be enrolled at a qualified school at least half-time
- Room and board costs may not exceed the limits determined by the school for federal financial aid purposes
- On-campus housing and off-campus housing are included (within the limits above)
It is important that you verify your school’s room and board limits for financial aid every year, as they can change and vary not only from year to year, but school to school as well. This means that if your child decides to live off-campus, you can still use the money saved in the 529 account to help pay for their living expenses. Since off-campus is usually more expensive, the reimbursement allowed by the school for federal financial aid purposes may not cover all the expenses, but it can cover at least a portion of the cost.
Remember to retain all documentation for college expenses. Also, it is a good practice to pay the landlord or property manager directly from the 529 account.
For more details, please refer to the article “Fact: Room and Board is a Qualified Expense”:
As always, please reach out to your tax preparer with any questions or concerns.
~ Kayleigh Crawmer
Client Manager
