Dear Tax Gods,
My understanding of Form 8863 (as of yesterday) is that with (2) children in college, I can claim/collect up to $5000 in education credits, $2500 per child. I know there are other nuances associated with allocation of education expenses with 529 plans "in-play" but I won't go into that.
For a family making $160,000, the full $5000 is available. For a family making $180,000, it drops to $0. Wow!
Coincidentally, my wife started working this year. I make around $155k. She makes around $25k, so total around $180k. So, I'm finding we don't qualify for any of the $5000 education credit.
The kicker is that I put aside $19,000 to a Roth 401k this year. Hypothetically, if I had made my contributions traditional 401k instead of Roth (which I had the option to do), this would have dropped my taxable income (which I knew about) and would at the same time qualified me for the vast majority of the education credit (which I did not know about). The second kicker is that I was actually making traditional contributions last year but because these are still taken into consideration for financial aid purposes (on CSS profile), I had decided to revert back to Roth 401k contributions.
Question: Assuming there are no issues with my understanding above, is there a pathway for me to receive this education credit, i.e. not get screwed.
Thoughtful responses would be much appreciated.
