I'm really hoping someone can help me here. I went through Turbo Tax , section on Education Credits, and it said I was eligible for the $2500 American Opportunity Education credit.
I happened to mention this to a couple of other people who asked if I paid tuition from a 529 plan ...which I did. They said I couldn't claim the credit since this was the case.
I started doing research and it seems like there is a lot of confusion about this. I've spoken to several Turbo Tax experts and I can't get a straight answer either.
My situation:
Tuition paid from NC 529 and listed on my son's 1098-T: $13, 455
Scholarship on 1098-T: $250
Gross distribution on box 1 of the 1099-Q (in my son's name) : $13, 164
Earnings listed on box 2 of the 1099-Q : $4,501
Basis listed on the 1099-Q: $8,663
I've seen some articles that discuss similar scenarios, but there seems to be confusion as to whether , as a parent, I'm eligible to claim the credit because I paid all the tuition from the NC 529. Some folks are saying I should've paid some portion of the tuition "out-of-pocket". Even if I am eligible, how much can I claim?. I'm also baffled as to why Turbo Tax didn't catch this and ask for further details. There was a question about whether we used a 529 for an education loan. The answer is no because he didn't have a loan.
North Carolina does not offer a tax break for 529 contributions, but does offer tax-free gains when used for qualified college expense. I've seen the calculations (including the IRS site) about possibly determining additional taxable income amounts when claiming the credit, but even if I go by those, I can't figure out where to list in Turbo Tax. I'm also not sure if that should be listed on my return or my son's return, since the 1098-T and 1099-Q are in his name.
Any insight would be greatly appreciated.
Thank you
