topic Re: Education Expense Optimizer in Education

Education Expense Optimizer

FranW — Thu, 02 Jul 2020 23:22:50 GMT

Reading IRS publications would indicate you can take AOC credit as long as you include 529 account interest in income and do not include in itemized deductions on Schedule A (and education expenses qualify, income within limits). However, TT continues to select itemized tax deduction instead of AOC credit when using Education Expense Optimizer. The only way to get it to work is to override and manually input the corrected tax exclusion amount in AOC column on Student Info Worksheet. Have others encountered this or is there some other factor that I am missing?

Thanks

Re: Education Expense Optimizer

Hal_Al — Mon, 06 Jul 2020 23:42:58 GMT

You are correct, you can take AOC credit as long as you include some of 529 account earnings (interest) in income

But the education credit (AOC) and the 529 plan earnings exclusion have nothing to do with itemized deductions. TurboTax will not make that mistake. The education deduction, as a job expense (an itemized deduction subject to the 2% of AGI threshold), was eliminated beginning with tax year 2018.

Delete and start over. Enter the 1099-Q first, then enter the 1098-T (educational expenses). You will eventually reach a screen "Amount used to calculate education deduction or credit" Be sure the amount in that box is $4000 (assuming you're claiming the maximum AOC).

Re: Education Expense Optimizer

FranW — Mon, 06 Jul 2020 23:05:45 GMT

Thank you-this was most helpful and seems to have fixed the issue. But, wow, just by reentering the same information in a different order makes a difference (???)--frustrating, but I'll make a note for next year.