Good afternoon mfrank:
It sounds like you're following-up this thread: http://forum.savingforcollege.com/t/off-campus-housing-and-board/11578/2. I actually went back to good ol' Publication 970, but the language is pretty vague. In fact, every reference I can find in the code, including the original Section 529 code, refers to Room & Board expenses in aggregate. From section 529:
So since there is no explicit guidance about this, let me give you my thoughts.
If you request it, the school will provide a breakout of room and board expenses. Most will publish this information, such as Boston University does here. BU shows their estimate for the 2016/17 academic year to be $9,810 for room and $5,060 for board.
Conservative interpretation
Now, as Joe said in his original response to your question, "Theoretically the IRS could require substantiation of every expenditure included in your total R&B figure." What this means is that if you are looking at this conservatively, you would want to stay under the cap for each respective figure within its category (i.e. do not combine room and board). So if you go to BU, don't spend more than $9,810 for room expenses, or $5,060 for board.
Aggressive interpretation
However, the code always refers to room and board together, which implies that it is an aggregate and you can go above either cap at BU so long as you don't exceed the combined $14,870 total.
Practical interpretation
You have to remember two things: 529 plans are self-reporting, and 529 plans are designed to allow you to pay for higher education expenses. So you're probably going to be fine if you spend $10,000 on room and $4,000 on board, so long as you can tie all of the receipts back to qualified expenses. The IRS is unlikely to make a stink unless you've got questionable expenses in there. Like a yacht.
That said, I need to point you to the disclosure in my signature. I'm here to provide information, but none of the aforementioned are recommendations. Ultimately you should seek the opinion of a qualified tax professional if you believe that you might encounter one of these situations to make sure you are comfortable with your answer in the event of an audit.
Thank you,
Brian Boswell
VP, Research & Development
This information does not constitute tax advice and is provided for informational purposes only. Please consult your tax advisor, financial advisor, local taxing authority, and/or plan provider or sponsor for more information.
