In order to take the American Opportunity Credit, $4000 of the 529 withdrawal was taxed. This generated an income of $1,161 on line 8z of Part I of the federal Schedule 1. Under the state of Michigan Turbo Tax program, it says to "enter the amount of your qualified withdrawal you made from a MESP, MI 529 Advisor Plan, that was included in your federal income." If I enter the $1,161 here, this amount is subtracted from the MI income on the Michigan Schedule 1. The AGI that transferred from the federal 1040 to the MI 1040 has this $1,161 in it. I assume for the state this $1,161 can be subtracted since it was for a qualified educational expense. Am I interpreting this incorrectly?
