Your deduction is being limited to $300 because one of you received non-taxable qualified tuition program distributions.
Your educator expenses are deductible only to the extent that they exceed:
- nontaxable interest on series EE or I US savings bonds
- tax-free withdrawals from a Coverdell savings account
- tax-free reimbursements of expenses
- nontaxable distribution from a qualified state tuition program
Because the limit is $300, it's common to just enter the $300 in these fields - however you will want to enter the amount you actually paid so that the deductible amount can be calculated.
To fix this, go back to the screen where you entered the educator expenses and adjust the amount to the actual amount spent.
For more information on the educator expense deduction and its limitations, please read IRS Topic no 458, Educator expense deduction.
