How to use 529 fund for college next fall?
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Anonymous
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Please share your pro tips, dos and don't to get prepare to pay for college next year!
Tia |
Anonymous
| Receive tuition bill. Pay it with 529 funds. Is there some hack that you’re looking for? |
Anonymous
| I called DC 529 to find out how and this is what I remember: call with info about the school address where tuition should go, student name, student ID#. Haven't done it yet but it sounded pretty simple. |
Anonymous
| The 529 support people are awesome. I had 2 accounts. Daughter went out of state for a year, moved his remainder to younger daughter for private tuition. It was super easy. Took about 3 minutes to pay the bill each semester. |
Anonymous
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I try to pay as many "official" bills with 529 so it can be direct. But once yr kid is living off-campus you may have to have the money sent to you and then you designate its use. I try to make it something easy to track like rent rather than books etc.
If you want to use the max federal tax credit (I think it's lifetime learning or something like that) make sure you don't use 529 for that amount each year as you can't "double dip". I can't remember the details but I think it's 4k/yr that we pay from non-529 sources. |
Anonymous
| We email our bill to our TRowe Price rep. and he sends in the funds. |
Anonymous
What we do is take a distribution from the 529 as a direct deposit to our checking account in the exact amount of the tuition bill, then pay the bill from that. Pay attention to the dates and make sure you're paying the bill and taking the distribution during the same calendar year. |
Anonymous
Thanks for posting this about the credit! I knew about it, but hadn't thought about how it would overlap or not with 529 funds. Just to make sure I understand... Let's say you need to pay $25k: Pay $21,000 from 529 Pay $4,000 from other funds Then you can max out the tax credit? |
Anonymous
I think there is also a limit on the tax credit depending on your income. right? |
Anonymous
| Do they actually audit it to make you prove you spent it on qualified expenses? How do they know otherwise? What does an audit involve? |
Anonymous
| We calculate how much we need (taking into account the $4k mention above), then we request a check be sent to us. We cash it then Venmo the boy money and he pays the tuition bill, rent, books, etc… |
Anonymous
Previous poster, if you can’t be helpful abstain from posting. You’re just being snarky here. From the Wall Street Journal: First, make sure you’ll be using the money for qualified expenses, such as tuition, room and board, books and supplies, and computers. Expenses that don’t qualify include things like transportation, campus parking, cellphones, club fees or dues, or furnishing a dorm room, according to the College Savings Plans Network, a repository for 529 plan data. For tuition and on-campus room and board, the easiest thing to do is request that 529 money be sent directly to the college or university. But account owners can request reimbursements for eligible out-of-pocket expenses—say for the purchase of books or a computer—that they or the beneficiary incur. The account owner has the responsibility to keep all purchase receipts for tax purposes. Plans won’t ask to see verification that you’re using the funds for a qualified expense, but the IRS might. Owners will want the receipts in case of a tax audit, Ms. Biar says. Another important tax issue: It is essential to take a distribution within the same calendar year that you incurred the expense, says Indiana State Treasurer Kelly Mitchell. If you pay out-of-pocket for a covered expense in October 2021 but don’t remember to reimburse yourself until February 2022, that distribution would be considered a nonqualified expense, she says. There could be state and federal tax consequences, and some plans may impose fees or penalties. |
Anonymous
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Credit:
AOTC is max $2500 per child, subject to AGI. LLTC is Max 20% of 10k per return. Subject to AGI No expense counts for more than one tax benefit. Virginia: You can spend and contribute in the same year and still get the deduction. IRS pub 970 goes through it all. |
Anonymous
You don't have to show the IRS any proof unless they ask you. And I've been using 529 money for about 10 years with 4 different kids and no one's ever asked me for anything. |
Anonymous
Qualification phases out over range of AGI such that if you file jointly and your AGI os $138,000 or more You can not take the credit. |