American Opportunity tax credit

[Celeste Yoshinobu]

On my 2019 tax return our son was eligible for the Am Op credit. Child #1 was in the third year of college and had tuition + books. This year child #1 finished ( had 4 year of Am OP : 2016, 2017, 2018, 2019) but still had expenses.  Child #2 started college with expenses and had never used the Am op credit.

When I entered all the 1098T's TurboTax told me I we were not eligible for credit. Our income is $149,000 with three dependents. Last year we were 132,732 with three dependents. Why are we no  longer eligible?

Thanks-
Celeste

[DawnC]

Your modified adjusted gross income (MAGI) is too high or you have something entered incorrectly in the Education section.   The threshold kicks in when your MAGI hits $160K (for joint returns).  To calculate your modified adjusted gross income, take your AGI and "add-back" certain deductions.   Your AGI is found on Line 11 of Form 1040 and the add-backs are listed in this link.   If your MAGI is below the threshold, go back through the Education section, carefully reviewing your answers.   Also, if MAGI is within range, see below to see how to use the Education Optimizer (letme function) - you might want to start here.   Sometimes it is something simple like you accidentally marked that one student was convicted of a felony or did not attend at least half-time.  

Qualifications for claiming the American Opportunity Tax Credit are:

• You paid an eligible student's qualified education expenses for higher education at any college, university, or vocational school with a student aid program administered by the US Department of Education.
• The eligible student is you, your spouse, or a dependent on your return.
• For the full credit, your MAGI (modified adjusted gross income) is less than $90,000 ($180,000 if you're filing jointly).
  • For a reduced credit, your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you're filing jointly).

Generally speaking, the IRS only lets you take one education credit or deduction. If you qualify for two or more education credits or deductions, the TurboTax Education Optimizer picks the one that gives you the biggest tax break.   To override this selection or to see a summary of what and why you do or don't qualify, open your return, search for letme (one word, no space), and select the Jump to link.  This will take you to the Education Credits and Deduction screen, where you can switch to a different education credit or deduction, assuming you meet the qualifications.

[Celeste Yoshinobu]

Thank you for the help.  On your list of add back  deductions the only that apply to us are:

Tuition and fees deduction

Qualified tuition expenses

Is it possible that my AGI $146,484 had the tuition we encumbered $16,696 added back to be = $163,180? 

This is larger than  our total income of $149,484.

[MarilynG1 · Accepted solution]

If you received the Tuition and Fees Deduction, that would be up to 4K (Schedule 1, Line 21). 

If you received a 1099-Q that was used for Education Expenses, you don't need to enter it in your return.

If the 1098-T's show that you qualify for an Education Credit (Box 1 amount larger than Box 5 amount), then enter them for your student(s) to qualify for an Education Credit. 

If not, you don't qualify for a credit, (unless you add other Expenses that added to Box 1 are larger than Box 5) which may be why you received the Tuition and Fees Deduction. 

You may want to delete both Students from the Education section and start again.

Since we can't see your tax return in this forum, you can request an Offline Review if you need more help.