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

Turbo Tax took the $4,000 deduction making his taxable income $0, which allowed him to get a refund of $385 for his fed tax deposits. However the $1000 tax credit which he qualifies for would have been a better choice. The program shows his American Opp Credit is $0 even though he qualifies.

He is not a dependant of our anymore and he meets all the other qualifications. that is why I am confused.

Even though he is not your dependent,* he still does NOT qualify for the AOC, because of the earned income rule. He does NOT "meet all the other qualifications". The Earned income rule is an additional rule for full time students under age 24.

If he only has $4000 of income, his standard deduction, alone, would reduce his taxable income to 0. He would not need the education deduction at all.

*Nothing you have described explains why he does not qualify as your dependent.