Lifetime Learning Credit issue not due to non-refundable limit

Forum|Forum|2 years ago
April 1, 2024
1 reply
0 views

I use Turbo tax desktop so I cannot ask this question through Live Advice.

In 2022 I finished my masters degree which my company pays for. I paid up front and get reimbursed for my tuition from my employer, but that generally lags the school semester by a month or so - my last semester of 2022 was reimbursed in 2023. One of my two fall semester classes in 2022 did not get reimbursed since it did not meet my employer minimum grade – but it did count as a pass grade. I believe I can use that class payment to qualify for the Lifetime Learning Credit (LLC). I am under the required AGI and I did have enough income taxes paid to have a tax reduction.

Since I did not get a 1098-T for 2023 (all payments were in 2021 and 2022), I tried to amended my 2022 form via Turbo Tax to qualify for the LLC since I did pay for the reimbursement denied class in 2022.

When I went to Turbo Tax to file the amended return, it said that I can’t claim an education tax break because of one of the following:

1) Somebody can claim me as a dependent (not the case).

2) Scholarships, grants and other tax free assistance exceeded the education expense (it did not I paid $4928 according to worksheet calculations).

3) There where no qualified educational expense (there was – I paid for one class that was not reimbursed).

The way I calculated the expense, I should have been able to reduce my total taxes owed by $986(20% of $4928) calculated by form 8863 and schedule 3. This should have been used to reduce my total 2022 taxes owed.

Detail calculation:

$43782 Qualified education expense in box 1 of 1098-T

– $ 5000 Grant in box 5 of 1098-T

– $33854 Employer reimbursement (combined 2022 and 2023)

---------

$ 4928

x .2 Line 12 of form 8863

---------

$ 986

What am I missing?

Thanks in advance.

AmyC

Level 15

Let's work through each issue.

1. Amending your 2022 sounds smart. Only 2022 income and expenses go on a 2022 return with your 2022 Form 1098-T. The education credit is nonrefundable so it reduces your tax liability. If you have no tax liability, there is no credit.

2.Somebody can claim - double check that you did not accidentally mark that someone could claim you

3. Scholarships exceed tuition expense. Maybe there was a typo entering the 1098-T so that the numbers are not correct and causing an error.

4. No qualified education expenses - double check that you marked all requirements for Qualified Education Expenses - Internal Revenue Service. For the Lifetime Learning Credit, you can qualify if you take the course to acquire or improve your job skills.

**Say "Thanks" by clicking the thumb icon in a post. **Mark the post that answers your question by clicking on "Mark as Best Answer"

krm123Author

Level 2

Thank you for your answer. Your reply made me go back and revisit everything. Sure enough - I missed something and when it was corrected I was able to continue and get the LLC reduction.

Thanks again.