Handling various 529 distributions to get to AOTC in TTax

[NCperson]

yes, I've tried a few times since we traded on this thread and everything does appear to be working correctly now 

[sgt-loudmouth]

I see mention of applying $x to AOC and $y to the Tuition Deduction and $z to a 529 plan.  When I run the step-by-step, it just asks for tuition and fees. 

If we have $10,000 in qualified education-related expenses, how would I tell TurboTax to apply $4000 to AOC, $1000 to the Tuition Deduction and $5000 to the 529 plan?  Is it as simple as overriding line 1 in part VI of the Student Information Worksheet in the AOC/Tuition/529 columns with $4000/$1000/$5000?

[Hal_Al]

You may claim either the AOC or the Tuition and Fees Deduction (TFD), but not both.  So, you want to allocate expenses to the AOC and the 529 plan (1099-Q).  You can not tell TT how to allocate to each.  TT automatically applies available expenses to the AOC first. 

To verify this was done, 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.

Alternatively, you can make manual adjustments on the  Student Information Worksheet (not available in online versions of TT). That will most likely prevent e-filing.

[sgt-loudmouth]

Thank you for replying.

I don't seem to have a "“Amount Used to Calculate Education Deduction or Credit” screen. (TurboTax Deluxe, Windows 10 desktop)

When I click edit next to “Education Information,” on the "Here's Your Education Summary" screen I visit 

• Was [student name] Working on an Associate, Bachelor's, or Graduate Degree? (Yes)
• What Was [student name's] Enrollment Status for 2020? (Full-time)
• Had [student name] Earned Four Years of College Credit Before 2020? (No)
• Is This [student name's] First Year of College? (No)
• Did Student Name Ever Receive the American Opportunity Credit or Hope Credit? (Yes. 2 years of AOTC.)
• This is just one of those things we have to ask about... (No, he is not a druggie)
• We'll make this entry zero that's no longer needed (I have no idea what this is about. If I go through the same series of screens again, shows this screen every time, so it *isn't* zeroing a problem value.)

And then I'm back at "Here's Your Education Summary".

[Hal_Al]

You will not get that screen if TT detects that there is no allocation needed.  I also have TurboTax Deluxe (Windows 10 desktop) and do get that screen. This year,  I get a screen titled "Choosing a larger education credit or deduction" with an “Amount Used to Calculate Education Deduction or Credit”  box .

When I changed my entries, so that I no longer needed to allocate expenses (I had enough expenses to  cover the 529  and give me the full AOC), I got that same screen that you did ("We'll make this entry zero that's no longer needed "), along with an explanation. That may be  new this year. 

It means you probably changed some entries.