I need help. This is the first year TT is saying I am eligible for the AOTC because my son was in college.
He received a 1098-T. Box 1-$5238.00, Box 5-$3475.00. That left $1755.00 we paid for tuition and fees. We still claim him as a dependent on our taxes, so my understanding is I enter the 1098-T on my return.
We probably spent 200 on books, supplies, etc, making expenses $1955.00
I (the recipient) received a 1099-Q from a 529 distribution for $1944.00 with earnings of 523.91, Leaving the basis at around $1470.00.
TT seems to indicate that if I claim the 529 distribution as "taxable income" then I (the parent) can claim a credit for tuition and expenses under the AOTC. Once it is all entered, I do see that TT entered the earnings from the 529 onto my 1040 as taxable income.
I seemed to have missed this credit in 2023 when I paid tuition out of pocket and didn't use any 529 funds at all, but I am not going to amend that years return regardless.
Honestly, I didn't know this credit existed until I started putting the info in TT this year. It does help reduce our tax burden for us to claim the credit, as opposed to allowing the 529 to be completely tax free. Is this correct?
Also, for the credit, should I only claim the taxable earnings to get a credit, so the $523.91? It's so confusing.
