Why is TurboTax and other software calculating my AOTC refund as over $1,000?

Forum|Forum|4 years ago
April 5, 2022
1 reply
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I thought the maximum refund would be $1000 for whatever amount over $4,000 paid in tuition/expenses? I paid $1,025 in school expenses and it's reflecting as that same amount as my total refund. I did have a lot of taxes I owed but I over paid estimated taxes for so I am getting a refund from that. Is it possible I'm getting the entire tuition expense back because I owed taxes, hence it's getting treated as a deduction which now because I applied the estimated taxes paid, shows up as a refund of the entire amount. Apologies if this sounds confusing. Basically, why is the AOTC giving me the entire tuition I paid back as a refund?

Hal_Al

Employee

Q. Basically, why is the AOTC giving me the entire tuition I paid back as a refund?

A. Because that's how the AOTC works. TurboTax is doing it correctly.

The AOTC is 100% of the first $2000 of expenses. So, $1025 of expenses is a $1025 credit. The AOTC is 25% of the next $2000, so $4000 of expenses gets you the maximum $2500 credit.

The $1000 you may have heard of is the maximum refundable portion of the credit. The credit is 40% refundable (40% of the max $2500 = $1000).

Note that the AOTC appears partially on line 20* (the non refundable portion) of form 1040 and line 29 (the refundable portion)

*Line 20 may include other credits from Schedule 3.