Federal Qualified Educational Expenses will not transfer over to state

[Momof2boyz]

I have federal qualifiable educational expenses.  However, they are not transferring over to my Kentucky state taxes.  The box is blank on form 8863-K. How do I get this to transfer?  I have indicated that it is an eligible institution located within the state of Kentucky, and I have marked that it is undergrad.

[MayaD]

You cannot take the 2024 Kentucky Education Tuition Tax Credit if you are not eligible for the Federal Education Credits. The credit equal to 25 percent of the amount of the federal American Opportunity Credit and the Lifetime Learning Credit is available.

Enter your Education Expenses on the federal return then:

1. Open your KY return
2. Continue to the screen Federal American Opportunity Credit Summary
3. Select to edit the form
4. On the screen Confirm School Information check the box This school is located in Kentucky.
5. Enter Qualified Kentucky Education Expenses. Qualified education expenses are amounts paid for undergraduate tuition and fees required for the student's enrollment or attendance at an eligible educational institution located in the state of Kentucky.
6. Continue to see the screen Your Education Credit Total

[Momof2boyz]

Thank you so much, @MayaD. I found the screens and where to enter the info. I had just assumed it would automatically carry the amounts over from federal to state when we qualified for the Federal Education Credits.

On federal, the IRS informs you how to allocate scholarship money to room and board (if the scholarships are not restricted, which my son's are not) in order to qualify for the AOC. (Publication 970).

(1)Regarding the Qualified Kentucky Education Expenses, should the amount entered in that block only be paid by personal cash, check, or loans for tuition and fees? Specifically, NOT covered by scholarships? Is that correct? (2) Should the federal education expenses then match the state expenses? Should they both be $4,000 since I freed up $4,000 of expenses for the federal tuition credit using the scholarship allocation to claim the AOC? Thank you so much.

[AmyC]

1. Yes money that you paid whether cash or loan, it is NOT scholarship money.

2. Yes, you freed up $4,000 on the federal so use that on the state.