If TT said I am eligible for the $2500 American Opportunity credit, why did it only calculate $1000? Is this connected to the credit for educational expenses?

[KurtL1 · Accepted solution]

The American Opportunity Credit (AOC) has a maximum credit amount of $2,500. The maximum will only be paid if the total educational expenses exceeded $4,000.

The AOC is broken down into possible two parts. The credit reduce your taxes due by up to $2,500. If the credit brings the amount of tax you owe to zero, you can have 40 percent of any remaining amount of the credit (up to $1,000) refunded to you.

The first part of the credit is shown on Line 3 of Schedule 3.

The second part of the Credit is shown on Page 2 of Form 1040, Line 18c