topic How do I claim AOTC credit when I received scholarship and QTP distributions? in Education

How do I claim AOTC credit when I received scholarship and QTP distributions?

Papoon — Tue, 04 Jun 2019 22:40:26 GMT

I am trying to claim the American Opportunity Tax Credit. In 2018 I completed my 4-year degree. I have not been a dependent on any other return for 2 years. I received a scholarship for tuition, room, and board. I also withdrew my 529 plan balance since this was the last year I could do so using the receipt of scholarships as the reason to avoid paying a penalty. Presently TurboTax says I do not qualify because

Scholarships, grants, and other tax free assistance exceed the education expenses
Qualified Tuition Program distributions exceed the education expenses
There were no net qualified education expenses

I understand that I will need to pay taxes on more of my scholarship and QTP distributions in order have educational expenses that can be used to qualify for the AOTC. My question is: How do I adjust where educational expenses get allocated in order to make enough of my scholarship and QTP distributions taxable so I qualify to claim the AOTC?

Get back to the "Here's Your Education Summary" screen (P...

KrisD — Tue, 04 Jun 2019 22:40:27 GMT

Get back to the "Here's Your Education Summary" screen

(Personal, Deductions & Credits, Scroll down to Education, Click Update next to "Expenses and Scholarships",

Continue, Click Edit next to the student's name)

On the "Here's Your Education Summary" screen, scroll down to "Education INformation" and click Edit

Continue through the interview and the last screen has the amount to allocate to a credit. For the Maximum AOTC, you would allocate $4,000.

Please be sure to again finish the interview and click "Maximize My Education Tax Break"

OR switch to Forms, look at line 17 of your "Student Info Wk" and change to 4,000

Thanks you. It was somewhat more complicated than this f...

Papoon — Tue, 04 Jun 2019 22:40:28 GMT

Thanks you. It was somewhat more complicated than this for me but I do not think I would have found the solution without this lead in the right direction. In my case I also had to override Line 13 of the "Wages, Salaries, & Tips Worksheet" in order to get TT to properly reflect the increased taxable amount of the tuition scholarship once I applied $4k of it other eligible education expenses.