Qual State Tuition Prgm from 1099-Q Other Income - Qualified Education Expense Used for American Opportunity Tax Credit

Forum|Forum|2 years ago
May 7, 2023
1 reply
0 views

For my 2022 return Turbotax is using $8974 of qualified education expenses towards education credits, and the only credit I see is for the American Opportunity Tax Credit. Shouldn't the max amount be $4000?

From the IRS website:

"The amount of the credit is 100 percent of the first $2,000 of qualified education expenses you paid for each eligible student and 25 percent of the next $2,000 of qualified education expenses you paid for that student."

Link to the website:

AOTC | Internal Revenue Service (irs.gov)

This is causing a higher taxable amount from our 529 plan distribution.
Am I missing something here? Thanks in advance for your responses.

Best answer by Hal_Al

Q. The only credit I see is for the American Opportunity Tax Credit (AOTC) . Shouldn't the max amount be $4000?

A. Yes, the maximum needed for the AOTC is $4000. But there is a 2nd credit, the Lifetime Learning Credit (LLC), which requires $10K Qualified Education Expense (QEE)for the maximum credit amount. There's a glitch, in TT, it assumes (up to) $10K, even if you are claiming the AOTC.

Go through the entire education interview until you reach a screen titled "Your Education Expenses Summary". Click edit next to the student's name. That should take you to a screen “Here’s your Education Summary”. Click edit next to “Education Information”. When you get to the screen titled “Amount Used to Calculate Education Deduction or Credit”, verify the amount you want to use or change it (to $4000, in your case).

If you are using TT desktop (CD or download), instead of online, you can make the change directly on the Student Information worksheet (part VI, line 17, first column).

Hal_AlAnswer

Employee

Q. The only credit I see is for the American Opportunity Tax Credit (AOTC) . Shouldn't the max amount be $4000?

If you are using TT desktop (CD or download), instead of online, you can make the change directly on the Student Information worksheet (part VI, line 17, first column).