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American Opportunity credit

99mtamchamp
Level 2

It's been my understanding that if you take a distribution from a 529 plan to pay tuition you are not eligible to take any kind of education credit if the distribution is equal to or greater than the tuition paid.  I've entered the information from the 1099-Q and the 1099-T but the system is still givoing the taxpayer $2500 credit.  Any suggestions how it should be entered would be appreciated.

 

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4 Replies 4
abctax55
Level 15

Did you reduce the amount of the tuition on the F 1099-T (sic)  BY the amount that was actually paid by the 1099-Q distributions?

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99mtamchamp
Level 2

I thought by entering details from both the 1099q and 1099T the software would calculate the credit or at least have a diagnostic to check it

 

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abctax55
Level 15

I use Lacerte.... and it doesn't.   As 529 distributions can be used for MUCH more than just tuition, you have to manage the amounts that are input.

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99mtamchamp
Level 2

Have you allowed the earning on the 1099Q to be taxable to be allowed to use the AO credit?

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