AOTC

[Terry53029]

The AOTC is up to a $2500 credit with $1000 refundable If qualified. here are rules for the refundable part.

You don't qualify for a refund if items 1 (a, b, or c), 2,
and 3 below apply to you.
1. You were:
a. Under age 18 at the end of 2022, or
b. Age 18 at the end of 2022 and your earned income (defined below) was less than one-half of
your support (defined below), or
c. Over age 18 and under age 24 at the end of 2022
and a full-time student (defined below) and your
earned income (defined below) was less than
one-half of your support (defined below).
2. At least one of your parents was alive at the end of
2022.
3. You are filing a return as single, head of household,
qualifying surviving spouse, or married filing separately for 2022

I have a client HOH, and ProSeries is putting $1000 of her credit as refundable (incorrectly). Her tax lability is high enough to get the full $2500 credit non refundable, so her bottom line would not change.

Do you think I should override to put credit in correct place, or just leave it, as bottom line doesn't change. My concern is the 8867

[rbynaker]

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@Terry53029 wrote:

You don't qualify for a refund if items 1 (a, b, or c), 2,
and 3 below apply to you.
1. You were:
a. Under age 18 at the end of 2022, or
b. Age 18 at the end of 2022 and your earned income (defined below) was less than one-half of
your support (defined below), or
c. Over age 18 and under age 24 at the end of 2022
and a full-time student (defined below) and your
earned income (defined below) was less than
one-half of your support (defined below).

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Which item in #1 do they meet?  a, b or c?

I would think it would be hard to meet one of those three and still qualify to file as HOH.  I haven't thought through all of the fringe cases though, so maybe you found one.

[TaxGuyBill]

Have you gone through the error-check?  The questions on the bottom of the 8863 need to be filled out.  If you have filled them out, double check if you answered them correctly (it should probably be yes, no, yes).

[Skylane]

I understand the concern. Practically, I wouldn’t override since it doesn’t affect the bottom line….

out of curiosity, if you change the income so that a refund would come into play, does PS allow the refund?

[Terry53029]

To add more details. client is the parent of the student (age 20, 1st year college) Mom lives alone with son and is sole support of the household. a note to @TaxGuyBill the questions on the bottom of 8863 is to be filled out only if taxpayer is under 24. I believe that is for students claiming the credit as a non dependent.

I am never sure if the rules apply to the student or taxpayer that is claiming the student, but it says if you don't file MFJ then you don't qualify for the refundable part. I read the 8867 on the part on the refundable portion of credit. First question is taxpayer over 24 if checked yes, the tax payer is qualified for the refundable part of the credit. Guess I was trying to over think it 😔 I guess client is qualified. Thanks for everyone's input

[TaxGuyBill]

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@Terry53029 wrote:

You don't qualify for a refund if items 1 (a, b, or c), 2,
and 3 below apply to you.

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The rules you stated say that they don't qualify for the credit if they if meet ALL three of those criteria.  They don't meet #1 (they are over age 24), so they qualify for the refundable credit.