529 Plan Audit: The 'Room & Board' Cap for Off-Campus Housing

Описание: Your child is moving into an off-campus apartment with friends. You assume you can just use your 529 plan to pay the rent because "Room and Board" is a qualified expense. You are likely wrong. You just walked into the "Cost of Attendance Trap." The IRS does not care what your actual rent is. They only care about the "Official Allowance" set by the university's financial aid office. If you pay a penny more than that number, you are triggering taxes and penalties.

As The Finance Observer, I’ve performed a forensic review of the "Qualified Higher Education Expense" rules and the specific "Half-Time" enrollment requirement that trips up parents. In this video, we dissect the difference between the "Billable Dorm Rate" and the "Off-Campus Allowance," why dropping a class can make your rent retroactively taxable, and the "Double Torpedo" that hits grandparents who own these accounts.

FORENSIC BREAKDOWN:

0:00 The "Blank Check" Myth: Why off-campus housing is not automatically qualified

0:34 The Requirement: "Qualified Higher Education Expense" (QHE) defined

01:37 The Trap: Actual Rent vs. The "Cost of Attendance" (COA) Cap

02:04 The Source: Why the Financial Aid Office determines your tax limit

02:28 The "Half-Time" Rule: Why dropping a class disqualifies your rent payment

03:00 The Calculation: Rent + Utilities + Food (Must be University COA)

03:22 The "Gap": Spending $15,500 when the school only allows $12,000

03:56 The Evidence: The 3-Step "Audit Proof Checklist" (Lease, Calendar, COA Letter)

04:40 The Consequence: The 10% Penalty + Income Tax on Earnings

05:12 The "Grandparent Double Torpedo": Spiking AGI, Taxable Social Security, and IRMAA premiums

DISCLAIMER: I am The Finance Observer. This content is for educational purposes only. To use 529 funds for off-campus housing, the student must be enrolled at least half-time. The amount you can withdraw tax-free is limited to the "Cost of Attendance" figure for room and board determined by the university for federal financial aid purposes. Always contact the school's financial aid office to get this specific dollar amount in writing before making a withdrawal.