The software had me enter 1098-T info for my dependent student from the university. Box 1 is 11,385. Box 5 is 6,395. (qualified payments minus scholarships equals 4,990). Books and equipment expenses paid separately equals 885.38. In total, we paid 5,875.38 in expenses. 529 distribution amount on 1099-Q is 4,072. I expect AOTC amount to be 1,803.38 since I won't double dip with 529. However, TurboTax gives AOTC amount of 2,500. TurboTax did not direct me to enter any 1099-Q info so after finishing education credit section, I had to get link to help box to enter. Also, TurboTax states earnings on 1099-Q are taxable. I know the earnings aren't taxable since qualified distribution is less than qualified expenses. I know AOTC TurboTax calculation is too high. It should have factored in I cannot double dip and deducted 529 distribution amount from our qualified expenses before AOTC credit was determined. How do I fix this? Our student only had 1,174 work income last year (no federal taxes withheld) and no unearned income, so she did not plan to file taxes.
