Claiming AOTC

[mrosenb515]

How do I claim the American Opportunity Tax Credit using Lacerte 19? I have two dependent college students who took distributions from Coverdell ESAs in 2019 under their Social Security numbers. But we want to claim the AOTC under parents' SS numbers. We withdrew $4,000 per student less than the maximum so we could file for the maximum AOTC. I am a first-year tax preparer, so the more specific your instructions the more they will help. Thank you! [email address removed]  

[George4Tacks]

Screen 38.1 for the credit

https://proconnect.intuit.com/community/help-articles/help/reporting-an-education-distribution-form-...

[itonewbie]

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@mrosenb515 wrote:

...I have two dependent college students who took distributions from Coverdell ESAs in 2019 under their Social Security numbers. But we want to claim the AOTC under parents' SS numbers. We withdrew $4,000 per student less than the maximum so we could file for the maximum AOTC....

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You can't plan it this way.  Education benefits are all coordinated.  No double dipping is allowed in any way.

AOTC is always on the first $4,000 incurred.  Qualified education expenses eligible for excludable distribution from ESA must be reduced by any such expenses on which AOTC is claimed.  It does not matter whether the account is under the student's or parent's SSN because both AOTC and ESA are with respect to the student.

What you can plan is to determine whether it is more beneficial to forgo AOTC in favor of ESA or to claim AOTC on the first $4,000 and ESA on the balance.

Be careful with this as there is a due d penalty attached to this provision.

[mrosenb515]

Thank you for your response. If I have $20,000 of qualifying higher education expenses and withdraw $16,000 from the Coverdell, I can take the $4,000 AOTC, as long as the AOTC is reimbursing me for tuition and books and my joint income is under $160,000. Room and board qualify as higher education expenses for withdrawing from the Coverdell, but not for AOTC. 

The Coverdell accounts are under my kids' SS numbers. I list their Coverdell withdrawals on their returns. I want to take the AOTC on my return. Questions: Do I put anything on their returns saying that I am taking the AOTC on my return, other than listing them as dependents? And on what lines in Lacerte for my return do I claim the $2,500? (I get 100% credit for the first $2,000 of qualifying expenses and 25% of the second $2,000)

Thanks again.