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Turbo Tax is calculating all of my American Opportunity Credit as "Non-refundable" on form 8863. Why would it not calculate any portion of that as "Refundable"?

 
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2 Replies

Turbo Tax is calculating all of my American Opportunity Credit as "Non-refundable" on form 8863. Why would it not calculate any portion of that as "Refundable"?

You can’t get the refundable portion if you haven’t had enough earned income to provide more than half of your support and have a living parent. If you are a dependent it’s generally better that the parent claim that credit if otherwise eligible. 

Hal_Al
Level 15

Turbo Tax is calculating all of my American Opportunity Credit as "Non-refundable" on form 8863. Why would it not calculate any portion of that as "Refundable"?

The usual reason for that is that you have indicated that you can be claimed as a dependent on somebody else's tax return (usually you parents) and that they are not actually claiming you and/or you are a full time student, under 24 who does not provide more than half their support with your own earned income. 

 

While technically there is a provision that allows your student-dependent to claim a federal tuition credit, from a practical matter it seldom works out.  A student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit (AOTC) if he/she supports himself by working. She cannot be supporting herself on student loans & grants and 529 plans and parental support.  It is usually best if the parent claims that credit.  

If the student actually has a tax liability, there is a provision to allow him to claim a non-refundable tuition credit. But then the parent must forgo claiming the student as a dependent, and the $500 other dependent credit.  The student must still indicate that he can be claimed as a dependent, on his return. This is worth up to $2500 (AOTC shifts to all non refundable)

https://ttlc.intuit.com/questions/3936383-tuition-gift-to-children

https://ttlc.intuit.com/questions/4531097-just-because-i-can-claim-a-college-son-daughter-do-i-need-...  

 

 

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