Looks like many others are having issues with the education tax credits section this year. I'm using the online version and there seems to be a real problem with how TurboTax is determining whether a dependent student qualifies for the AOTC.
My scenario - dependent son is in his second year of college. We claimed the AOTC for him last year via TT with no issues. Last year, his 1098T from the school showed ~$37k in payments received for qualified tuition & expenses, and $21k in scholarships. So, we had ~$16k in expenses that could be used to claim the AOTC.
This year, similar numbers on his 1098T, so ~16k in qualified expenses again. As I entered his data on this year's form, TT at first told me he was eligible to claim the credit and gave me the amount of the credit. But as I got toward the end and was reviewing my federal numbers, something had changed and I was no longer receiving the AOTC! So I went back through the deductions & credits section again and reviewed all the numbers, but when I got to the end of my son's entries it now said he did not qualify, because:
- "Somebody else can claim [child] as a dependent on their return"
- "There were no net qualified education expenses"
This is bizarre. Of course someone else can claim him as a dependent on their return -- me! That's what I'm trying to do, so I can claim the AOTC for him.
As for the second bullet -- this also makes no sense. His net qualified education expenses are ~$16k again, like last year. Why is he now not qualifying for AOTC? What made TurboTax first say he qualified, only to change its mind when I got to the end of the federal filing process?
The only thing I can think of is that perhaps TurboTax is doing something weird with our 529 distributions. The amount on box 1 of our 1099-Q is higher than his net qualified expenses -- but that's because we're using that money to pay for non-qualified expenses (room and board) and what's leftover to pay for his tuition after the scholarship and paying $4000 of tuition with non-529 funds so we can claim the AOTC without "double-dipping" between AOTC and 529. We had this same situation last year and there was no problem, TurboTax said he qualified for the AOTC. So I'm not sure what's wrong this year. Any ideas?
