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Claiming LLC or AOTC gives my son a full refund of the $64 tax deduction from his lifeguarding job, but he ended up owing almost $300 in state taxes (Virginia).  Did I do something wrong?

 

I instead entered his QTP earnings using this formula  (scholarship amount / total distribution) x total earnings from distribution. Using this he gets his $64 refund and $0 state tax. Is this the way to do it?