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  • #16
    What spiritrider said is really important. The forms the 529 and school send are reporting to you and the government, total payments for the year. The school total cost of attendance is not documenting your payments, it is limitations.

    ”“Account owners must reimburse themselves in the same calendar year the expenses were incurred.”

    ”but you do need to keep the receipts, canceled checks and other paperwork in your tax records”

    Payment directly from the 529 directly is the cancelled check instead of your own personal check. All eligible payments won’t be from the 529. Personal choice. Because of education tax credits, you might want a spreadsheet (with invoices and how paid) and if reimbursed out of the 529.
    Face it, you are going to be over or under. Documentation is between you and the IRS.
    I could be wrong, the computer allowed expense I think is a one time purchase for undergrad and you can add software like MS Office and virus etc.
    It is not that bad, get the bills and pay them for the pretax benefit. Yes, the deposits count because you get credit for the bill.

    It gets really complicated is you get university academic, athletic (NCAA compliance), outside scholarships and throw in 529 as well. In 4 years you will be an expert and never want to see it again.

    Just a social comment, I would never expect a college student to tackle this. One example of having parental involvement. It makes a difference.


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    • #17
      Originally posted by Tim View Post
      I could be wrong, the computer allowed expense I think is a one time purchase for undergrad and you can add software like MS Office and virus etc.
      There is no such limitation. While I don't think I would buy a new one every year. I purchased a laptop/tablet pair for undergrad and I plan on purchasing a new pair for my recently graduated youngest.

      Even the computer depreciation schedule for businesses is five years. Four (4) years is probably a reasonable replacement period. I can't see the IRS having any problem with that.

      Qualified education expenses can also include; internet (services, cable modem, router, etc...), printers, laptop peripherals (larger display, keyboard, mouse, speakers, etc...) and any software other than non-educational sports, games, or hobbies.

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      • #18
        So my Dad was pretty business savvy (although my parents got a divorce when I was 2, so wasn't really exposed to it much)....
        He went from being a military doc making $10K/year in late 1960's to making $100K/year in his first year of private practice.
        He opted to buy his medical equipment outright and then gifted it to his children.
        He then made payments to his children for the office equipment. This was the college fund.
        Interestingly, he sold his practice in 1974 due to divorce and moving out of town, so those payments continued by the physician who purchased his practice for the next 15 years or so.
        This funded 4 kids college education plus an additional $22K of my medical school (I was the only kid who got a graduate degree).
        However, since this was just in a brokerage type account, the trustee got the prospectus from the college (for instance, UC Davis, where my son is going to study biomedical engineering, yes, he is WAY smarter than Momma, is $37,126/year https://www.ucdavis.edu/admissions/cost ) and gave us the $$ for the each semester/quarter. I was then responsible for paying everything.... budgeting, making it last, etc.

        Sounds like there will be a lot more helicopter parenting (at least, get me the receipts, etc.) to be able to use the 529. Since personal expenses don't count, the 529 doesn't need to be as large as I was expecting.... Instead of being $37K, it is closer to $30-32K/year. We have saved $105K but planned to continue funding throughout college to get the full amount... however this may change our decision to just cash flow the rest and not contribute to 529.

        Appreciate everyones experience, advice, and wisdom!

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        • #19
          The tuition, room and board for on-campus can generally be pretty easily handled. Most colleges and universities have provision for an authorized user on the student's financial account. In both my daughter's schools, they had such accounts. They notified you by email with semester e-bills, gave you full account access, including the ability to set up payment plans and receive payment plan installment notifications. There is transaction history available to print any documentation you might need for the IRS. Anecdotally, the IRS seems particularly stupid in not realizing, when the student moves off campus the 529 1099-Q is going to exceed their 1098-T by at least their off-campus housing and food costs.

          It is those years when they live off campus where the receipts for rent, groceries, restaurants and internet service can be a hassle. I just made my girls authorized users on my Amex card. Amex is one of the few card issuers that gives each authorized user a separate card number and their individual charges are easy to track. They were cautioned to never use those cards for anything other than qualified education expenses cleared by me. Of course they also had to keep receipts for any such expense. Which by the way is no small accomplishment for Millennials (who seem to have a pathological aversion to receipts). They were simply told they would reimburse me double for any charge without a receipt, problem solved.

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          • #20
            “There is no such limitation. While I don't think I would buy a new one every year. I purchased a laptop/tablet pair for undergrad and I plan on purchasing a new pair for my recently graduated youngest.“

            Undergrad cost of attendance allows one. I would have pushed it if there was a need. Bought a second for medical school. But that was out of reach from the NCAA.

            Just curious, is the after graduation for personal or additional education? After graduation it seems to be a question of timing if education is complete.

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            • #21
              The only qualified education expenses limited by the school's provided cost of attendance is off-campus room and board. The fact that the college estimates only one computer establishes no limitation.

              From Publication 970
              "The purchase of computer or peripheral equipment, computer software, or Internet access and related services if it is to be used primarily by the beneficiary during any of the years the beneficiary is enrolled at an eligible postsecondary school.school."

              The purchase is intended for graduate school, but there is no guarantee she goes.

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