Education Credit Amount

Forum|Forum|6 years ago
February 12, 2020
1 reply
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TurboTax says that my biggest credit is in the form of a tuition deduction wor th$4,000. I am confused as to how that benefits the dollar amount I will receive in my refund? My sister who qualified for the American Opportunity Education credit received a whole $2,500 from the credit according to TurboTax. I am confused as to why TurboTax reports my value as $4,000 but my total refund isn't even $1,000? I'm a 20 y/o junior in undergrad.

Hal_Al

Level 15

20 y,o. undergrads, who do not support themselves with earned income are not eligible for the (up to) $1000 refundable portion (not $2500) of the American Opportunity (AOC) credit. The $4000 Tuition & Fees deduction (TFD) must have been all that was needed to get your income tax to zero. In that case, it's better than the credit because it transfers to the state return, as well.

jzzenner

Level 2

Hello - my son is in the same situation as this person, he's 20 in his 2nd year of collage, worked this summer making under $4000 and wants to qualify for the $1,000 credit. Since he does not pay for school from his earned income, he does not qualify? Is that correct?

Hal_Al

Level 15

@jzzenner - Yes, that is essentially correct, but not exactly.**

A 20 y.o., in his 2nd year of collage, who worked this summer making under $4000, surely still qualifies as your dependent. You should be claiming the full $2500 credit, not just the $1000 refundable portion.

**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 if the majority of his support comes from his own earned income. 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.

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