I am so confused on the education credits and 1098's and hope someone can help...
Son 1 - took 4 years of AOTC, looking to use LLC
$23,845 tuition paid per box 1 1098T
$2,000 scholarships per box 5 1098T
$11,152 distribution per box 1 1098Q for me of which $5990.50 box 2 earnings
$7,238.20 distribution per box 1 1098Q for son of which $3,892.14 box 2 earnings
Son 2 - 1st year and no credit taken previously, looking to use AOTC
$16,928.57 tuition paid per box 1 1098T
$2,500 scholarships per box 5 1098T
$19,816.71 distribution per box 1 for son of which $10,219.41 box 2 earnings
If I add 1098Q's for my first son it reduces my refund by $2k, tells me $4k taxable income for second son. I do not believe any of the distributions are taxable because we also have $8k in room and board not entered into TT that are properly not included on 1098T so the amount we paid exceeds the 529 earnings.
I read here to not include my son's 1098Q and when I do that my education credits on Sch 3 line 3 is 3,465 = $1485 ($2475-990) nonrefundable credit 1040 line 20/8863 line 19 + $1980 ($2000*.99) 8863 line 18
2475 = $2,500 * .99
AGI does not exceed $180k so only phase out is .99 multiplier due to $160,213 total income
$3,465 in nonrefundable credits seems too high plus $990 refundable AOTC and I am concerned something is wrong.
Is it correct to exclude my son's 1098Q's?
Am I correct the 529 earnings are not taxable?
How do I determine how much of $4455 (3465+990) in credits relates to AOTC and LLC
Does $3465 represent $1980 LLC for son1 and $1485 AOTC for son 2?
So basically $2k LLC for son 1 and $2500 AOTC for son 2 = $4,500 without phase out/multiplier
I just don't want to screw up these credits and jeopardize that I cannot take them in future years.
Thanks!
