Q11. How do I calculate AOTC?
A11. You calculate the AOTC based on 100 percent of the first $2,000 of qualifying expenses, plus 25 percent of the next $2,000, paid during the tax year.
If you allocated the 529 to things like room and board; or other eligible expenses such as a computer, other required materials (books, etc.) for the AOTC, these count as well, not just the tuition. Basically, once you hit 4,000 of eligible tuition and expenses you get the full credit after your 529; for example, 6000(expenses)- 2000(529)= 4000 eligible expenses (full credit). 2,500, Remember, a 529 can be used for room and board as well.
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