NJ State Taxes

[Crawford28]

I am not claiming my 23 year old son on my federal taxes so he can claim the American Opportunity Education non-refundable credit. He does qualify as my dependent, I am simply not electing to claim him. His federal return indicates this information. I am losing $450 Credit of Other Dependents, but he's getting the full $2,500 credit.

My question relates to State taxes. I must file both NY and NJ state taxes. New York explictly states I can claim someone who wasn't claimed on Federal for educational credit purposes. New Jersey simply states I can claim someone who QUALIFIES for a Federal exemption. Does this mean I can claim my son on New Jersey even though I elected not to claim him on Federal?

Is there a way to accomplish this on Turbo Tax with different dependents on Federal and State?

[LenaH]

There are two parts of the American Opportunity Credit; the first being the refundable potion (worth up to $1,000) and the non-refundable potion (worth up to $1,500). 

As per 8863 instructions (page 6), taxpayers are not eligible for the refundable credit if all three of the following are true:

1. You are under the age of 24 years old and provide less than 50% of your support
2. At least one of your parents are alive
3. Your filing status is not married filing joint

Therefore, what remains is the non-refundable portion of the AOTC, but it requires at least an income of $14,600 in 2024 to the eligible for the credit. Above that amount, the credit can only reduce your child's tax liability to zero. But, if the child's income is less that that amount, it is not worth taking the credit on their return. 

Link to Original post 

New York,  Instructions IT-201, state that you are allowed to claim a dependent not taken on your federal return for purposes of the educational credit. New Jersey, however, does not seem to follow the same rules and doesn't allow you to claim dependents not on the federal return.

[Crawford28]

So then my son should only be getting a $1,500 credit (his income is above the $14,600 mentioned), yet Turbo Tax is generating the entire $2,500 for some reason.

As for NJ dependents, the linked instructions are exactly the ones I found, however, they only say they must QUALIFY to be a federal dependent, not that they must be CLAIMED as a federal dependent. That is the key part I am looking to find out. He is qualified as my federal dependent, but not being claimed. New Jersey's wording leads me to believe I can still claim him on my state return.

[LenaH]

I tried recreating this and would like to take a deeper look at this. However, I need a diagnostic file which is a copy of your tax return that has all of your personal information removed. You can send one to us by following the directions below:

TurboTax Online:

1. Sign into your online account.
2. Locate the Tax Tools on the left-hand side of the screen.
3. A drop-down will appear. Select Tools
4. On the pop-up screen, click on “Share my file with agent.”
5. This will generate a message that a diagnostic file gets sanitized and transmitted to us.
6. Please provide the Token Number that was generated in the response.

TurboTax Desktop/Download Versions:

1. Open your return.
2. Click the Online tab in the black bar across the top of TurboTax and select “Send Tax File to Agent” *
3. This will generate a message that a diagnostic copy will be created.  Click on OK and the tax file will be sanitized and transmitted to us.
4. Please provide the Token Number (including the dash) that was generated in the response.

*(If using a MAC, go to the menu at the top of the screen, select Help, then, “Send Tax File to Agent”)

 @Crawford28