topic 529 payment impact on american opportunity credit in Education

529 payment impact on american opportunity credit

Anonymous — Wed, 29 Jan 2020 15:21:32 GMT

Most of our daughters tuition was paid with 529 plan. How do we report that on Turbo Tax. Only 1750.00 was NOT paid with 529 money. so I believe the American opportunity credit is calculating incorrectly. It is using the entire 1098T value. Where do I fill out form 8863?

Re: 529 payment impact on american opportunity credit

JosephF8 — Wed, 29 Jan 2020 20:08:32 GMT

Qualified expenses for 529 plan money include more than just tuition.

Qualified expenses include required tuition and fees, books, supplies and equipment including computer or peripheral equipment, computer software and internet access and related services if used primarily by the student enrolled at an eligible education institution.

For someone who is at least a half-time student, room and board may also qualify.

Is there enough other expenses to allow the full credit?

Re: 529 payment impact on american opportunity credit

Hal_Al — Wed, 29 Jan 2020 21:10:38 GMT

You do not fill out form 8863; TurboTax (TT) fills it out for you based on your inputs, including answers to interview questions.

"TT is using the entire 1098T (box 1) value, instead of the $1750 out of pocket." TT should not use the box 1 amount, but it should use $4000 to get you the maximum American opportunity credit (AOC).

Go through the entire education interview until you reach a scree titled "Your Education Expenses Summary". Click edit next to the student's name. That should take you to a screen “Here’s your Education Summary”. Click edit next to “Education Information”. When you get to the screen titled “Amount Used to Calculate Education Deduction or Credit”, verify the amount you want to use or change it.

Re: 529 payment impact on american opportunity credit

Anonymous — Thu, 30 Jan 2020 12:29:53 GMT

I don't get the option, "Amount Used to Calculate Education Deduction or Credit" when editing it! It only asks about working on a degree, status, 4 years before 2019, first year, and any felonies!