topic My daughter has about $2300 in out-of-pocket tuition expenses for 2019. Why is the American Ed. Tax Credit she is receiving only $1,000? Thought it was 100% of 1st $2k? in Education

My daughter has about $2300 in out-of-pocket tuition expenses for 2019. Why is the American Ed. Tax Credit she is receiving only $1,000? Thought it was 100% of 1st $2k?

turbojholder20 — Sat, 28 Mar 2020 05:31:28 GMT

Re: My daughter has about $2300 in out-of-pocket tuition expenses for 2019. Why is the American Ed. Tax Credit she is receiving only $1,000? Thought it was 100% of 1st $2k?

Hal_Al — Sat, 28 Mar 2020 12:09:22 GMT

Only $1000 is refundable. If her tax liability is already 0, she will not get any more.

Actually the refundable portion is 40% of the total calculated credit, up to $1000. If she only had $2300 of expenses, her refundable credit should be $830, not $1000. Somewhere, you must have entered more expenses.

Re: My daughter has about $2300 in out-of-pocket tuition expenses for 2019. Why is the American Ed. Tax Credit she is receiving only $1,000? Thought it was 100% of 1st $2k?

Hal_Al — Sat, 28 Mar 2020 12:01:49 GMT

Does you daughter qualify as your dependent? That is, if she has 0 tax liability, why is she claiming the American Opportunity Credit, instead of you. The parent frequently qualifies for the full amount.

Re: My daughter has about $2300 in out-of-pocket tuition expenses for 2019. Why is the American Ed. Tax Credit she is receiving only $1,000? Thought it was 100% of 1st $2k?

turbojholder20 — Sat, 28 Mar 2020 18:55:05 GMT

@Hal_Al Thanks for the reply! She is almost 22 and lives on her own most of the year. So we didn't claim her as a dependent on our return. She has W-2's totaling around $14k.

Re: My daughter has about $2300 in out-of-pocket tuition expenses for 2019. Why is the American Ed. Tax Credit she is receiving only $1,000? Thought it was 100% of 1st $2k?

Hal_Al — Sat, 28 Mar 2020 20:42:04 GMT

"lives on her own MOST of the year" would seem to indicate she is only "away at school".

A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:

He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled
He did not provide more than 1/2 his own support. Scholarships are considered third party support and not as support provided by the student.
He lived with the parent (including temporary absences such as away at school) for more than half the year

So, it doesn't matter how much he earned. What matters is how much he spent on support. Money he put into savings does not count as support he spent on him self.

The support value of the home, provided by the parent, is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants.