AmyC
Expert Alumni

Education

I see the third 1098-T actually has enough tuition listed to get the full AOTC credit of $2,500 with a few changes.

 

I went digging and found  1099-Qs showing tuition expenses rather than any room and board costs. Since the 1099-Q is used up from room and board and tuition expenses, it should not be entered. See IRS Pub 970 states: 

Generally, distributions are tax free if they aren't more than the beneficiary's AQEE for the year. Don't report tax-free distributions (including qualifying rollovers) on your tax return.

 

You only need $1,554 to get the full AOTC for all 3 students. Either you had some room and board the 1099-Q could cover, allowing you more expenses paid out of pocket OR if there were no room and board costs allowed by any college, then you could add the income to the student.  I would bet that you have some room and board expenses, see 529 for Room and Board.

 

I do see the launch optimizer is giving you numbers above the $2500 max for AOTC but the program is calculating the right numbers. Your goal is for all 3 to say $2,500 and AOTC.

 

You need to:

  1. Remove the 1099-Qs. None have an excess withdrawal.
  2. Determine if there are any room and board costs of $1554 for any student to use up the 1099-Q.
  3. Change expenses for the third student such that the full AOTC is achieved.

 

If for some bizarre reason none of the colleges have room and board guidelines, you can add the $1,544 to the student income.

 

This increases your refund by $388.

 

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post