- Mark as New
- Bookmark
- Subscribe
- Subscribe to RSS Feed
- Permalink
- Report Inappropriate Content
Get your taxes done using TurboTax
Q. 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?
A. No. A federal tax credit doesn't help you on the state return. The taxable income from the scholarship and/or 529 earnings will transfer to the state return. The VA standard deduction is much less than the federal. Although $300 sounds like a lot.
Q. 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?
A. No. The formula is: non-qualified distribution amount / total distribution x earnings from distribution. But TT does that calculation. I don't know how you would even enter a manual calculation, except directly on the worksheets.