Need assistance with AOTC when there is a 529 distribution covering part of the education cost

Maxatrillion
Maxatrillion Member Posts: 3 Newcomer
in General

Hello, My daughter had $20,440 in educational expenses that qualify for 529 reimbursement (tuition, room and board, books, fees). Of those expenses, $13,462 qualify for the AOTC. We took a dispursement of $17,147 from the 529 plan. That means that we have $3293 of expenses that we can use to claim the AOTC credit. The problem that I am having is the freetaxusa wants to use $4000 of expenses towards the AOTC and then it is saying that roughly $600 of the 529 distribution is taxable. The 529 distribution covers all of the room and board expenses and part of the AOTC eligible expenses (so non of it should be taxable) then the rest of the tuition fees should be eligible for AOTC. So, I need to know how to fix the problem with some of the 529 disbursement being taxed and how to allocate only $3293 in expenses (instead of $4000) to count toward the AOTC credit. Thank you.

Answers

  • KeriC
    KeriC FreeTaxUSA Agent Posts: 218

    @Maxatrillion Great question! Due to the complexity of this issue, it may be best to reach out to support directly from within your account. This will allow them to review your entered information in detail and provide more accurate assistance based on your specific situation.

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