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Your spouse is not getting the deduction because of the nontaxable income from the 1099-Q. See the Educator Expenses Worksheet, image below, to see this. When I entered the deduction under the taxpayer, it transferred to Form 1040 and increased the refund. However, when entered for the Spouse, the deduction was limited by the nontaxable qualified tuition program distributions that the spouse received. Amounts on Line 9 are not deductible on Schedule A. Without the 1099-Q, Line 8 would equal $300. Or, if the 1099-Q was yours, your spouse would get the deduction. See the IRS excerpt below.
Topic 458 - IRS - Educator Expenses
Qualified expenses are deductible only to the extent the amount of such expenses exceed the following amounts for the tax year:
- The interest on series EE and I U.S. savings bonds that you exclude from income because you paid qualified higher education expenses,
- Any distribution from a qualified state tuition program that you exclude from income,
- Any tax-free withdrawals from your Coverdell education savings accounts,
- Any reimbursements you receive for expenses that aren't reported to you in box 1 of your Form W-2. @Barnhart0517
