1099-R and AGI

[michaelscottpc]

My wife inherited an IRA from her uncle.  We had taxes taken out and all is good that way.  What I did not expect was that Turbo Tax added that to our AGI income and that higher amount did not allow us to claim the American Opportunity Credit for one of our dependents.  The 1099-R box 7 is marked as death and the original IRA holder was over the age for RMD.

Is this correct?  Would this income from an inherited IRA "count" towards our AGI and then mess up the income limits for the American Opportunity Credit?  Thanks

[Bsch4477]

The distributions you take from a Traditional Inherited IRA are generally considered ordinary income and are subject to your regular income tax rate  

[michaelscottpc]

I do understand that.  What I am questioning is our total income.  Does the distribution amount count towards our total income and adjusted gross income calculated on form 1040 Line 11?   

[Bsch4477]

Yes, it counts toward your total income.