I entered my 1098-t education expenses but it says I do not qualify for an education tax break because "There were no net qualified education expenses". Why?

[AnnetteB6]

In order to qualify for an education tax benefit, you must have paid some education expenses from your own funds or from a student loan.  If TurboTax is indicating that you have no net qualified education expenses, that means that the amount of your scholarships exceeds the amount paid for tuition and other qualified education expenses.

If you feel this is incorrect, you should go back through the education section and review your entries.

[Carl]

First, to get any tax breaks for education you must have "earned" income. Additionally, if you qualify to be claimed as a dependent on someone else's tax return (usually a parent) then you don't get any tax breaks.

Education tax credits and deductions are based on out of *YOUR* pocket qualified education expenses paid with earned income that you earned in the same tax year you paid those qualified expenses.

Note also that if the scholarships awarded in box 5 exceeds the amount of qualified expenses paid in box 1, then you have no qualified out of pocket expenses and therefor don't qualify for any tax credits or deductions.

Keep in mind also that after you enter the 1098-T, follow up screens will ask you for those things not included on the 1098-T. So until you finish the education section in it's entirety, it's impossible to know the final results of anything.  Even then, those things you may or may not qualify for can change as you continue your tax return past the education section.

[Hal_Al]

 If you are eligible, you have answered  something wrong, in the interview. But, a lot of people are just not eligible. See https://www.irs.gov/Individuals/AOTC

You cannot claim a credit if you are, or can be, claimed as a dependent by someone else.

Furthermore, there's a new urban myth among college students that says they can get a $1000 from the government just for filing a tax form. For most of them, they simply aren't eligible. A full time unmarried student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working. You cannot be supporting yourself on parental support, 529 plans or student loans & grants. You must have actually paid tuition, not had it paid by scholarships & grants.  It is usually best if the parent claims that credit. 

[tfrye724]

The fact that turbotax doesn't tell you why you don't qualify is absolutely maddening, making me want to stop using the product. The software knows which flag makes me "ineligible" but I'm guessing  Intuit has decided not to have the software tell me why in an attempt to get me to pay for live help services. Intentionally making a product I'm already  paying quite a bit for for worse to try to get more money. 

[MaryM428]

if you do not qualify for education expenses, LIVE help will not be able to change that .  The answers you have received from Carl, Hal_AL, and AnnetteB6 clearly explain the reasons why some users do not qualify for education tax credits.  

Examples of Education Expenses

@tfrye724

@Carl 

@AnnetteB6 

@Hal_Al 

[devin08martin]

I have $12K in college expenses on Form 1098T; no scholarships nor grants. However, Turbo Tax says I do not get a education deduction because my scholarships and grants my exceed expenses. help! Turbo Tax (or intuit support) is unable to help. 

[Hal_Al]

Delete the 1098-T and start the education section over. 

Go through the entire education interview until you reach a screen titled "Your Education Expenses Summary".  Click delete next to the student's name. 

If that doesn't take care of it, explain why you thing you qualify for a credit and which credit.  

If you are eligible, you have answered  something wrong, in the interview. But, a lot of people are just not eligible. See https://www.irs.gov/Individuals/AOTC

https://www.irs.gov/newsroom/american-opportunity-tax-credit-questions-and-answers

 https://www.irs.gov/individuals/llc

https://www.irs.gov/pub/irs-pdf/f8917.pdf

You cannot claim a credit if you are, or can be, claimed as a dependent by someone else.

 A full time unmarried student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working. You cannot be supporting yourself on parental support, 529 plans or student loans & grants. You must have actually paid tuition, not had it paid by scholarships & grants.  It is usually best if the parent claims that credit. 

[Lhogue1]

I have the same question as many others. I'm claiming this credit for my son as I have every year since he entered college. I claim him as a dependent, he was a fulltime student, I paid his tuition, and his qualified expenses in box 1 exceed his tuition credit in box 5 by 100%. Though these amounts are less than in years past (he graduated at the end of last year), I still expected to be eligible for a tax credit. Yet I still get the response that I do not have any qualified expenses. I even get this response when I go back to the form and delete the 50% tuition credit.  I can only imagine two reasons for this: there's a minimum dollar amount for expenses to qualify, or something about the adjustments in years past have somehow carried through for this year. I don't really think it can be the latter, because there are no adjustments on the 2020 1098T, and the questions TurboTax asked about the 2019 1098T didn't include anything about the adjustments, just whatever is in box 2 ( which was empty). So I'm flummoxed, and am also thinking about switching to a different company, after seven years with TurboTax.

[Lhogue1]

So I solved it when I took the advice to delete the student and reenter his 1098T info for this year. At the end, that brought me to a screen asking if he'd gotten these credits in past years. At the bottom of the screen, a "4" was pre-entered for the number of years I've claimed the credit. When I went back through my tax forms for prior years, I realized I claimed this credit for 2016, when he started college in September. So that means this would be the fifth year and you only get the credit for four years.

TurboTax doesn't explain any of this, and I don't even know how it knows that I've already claimed him for four, when it doesn't know other things, like whether I filed a 2019 1098T for him. (I mean, it really should have cumulative records, but it doesn't seem to.)

So, problem solved. Maybe this is the situation some other people on this thread are finding themselves in. 

[ET77]

Another issue that should be obvious but wasn't to me -- enter your education expenses by clicking the edit button next to the name of the school / student on the Your Education Expenses Summary screen.

[devin08martin]

Thanks

[devin08martin]

Agreed! CAlling Turbo Tax support is a complete waste of time

[Lhogue1]

Yep, this held me up for a while too. I entered the amounts a different way and had to go back and delete them, and then thought that was the source of the other problems. It seems like in past years there was a more streamlined, logical flow through the different screens.

[Lhogue1]

Okay, now that I've actually filed my taxes, I was surprised to see that I do get a tuition deduction. That's because there's a difference between tuition deductions and the American Opportunity Tax Credit. At no point did TurboTax explain this to me (nor did any of the experts responding in this thread). If TurboTax provided more information, something like "You've already claimed the AOTC for four years, but don't worry, you're still eligible for the tuition deduction," that would be very helpful. It offers that kind of help in other sections, so it's hard to see why it's lacking in this one.