Can I claim earnings reported on 1099-q as income in order to qualify for AOC?

[karen0224]

ProSeries Basic is including the earnings from two 1099-Q's as other income and generating the full AOC.  This is generating a better result but I don't know if this is correct or if I entered something incorrectly.  I was expecting the software to not generate the AOC credit since the distributions from the 1099-Q's fully covered the tuition less scholarship.  I did two 1099-Q forms, one 1098-T, and the student information form.  Thanks for your answers in advance!

[taxiowa]

Yes the program is correct.  You are much better off claiming the earnings as income and taking the education credit than the other way around.  You can only use the net tuition/books amount once but it does not matter which one you choose.  Make sure the line on the student info sheet that says amount used for credit only reads $4,000 so the remainder of the tuition can help offset the 1099-Q's.  Sometimes Proseries fills this line in automatically wrong.

[karen0224]

Thank you so much!  I was guessing it was ok but when I researched this option I couldn't find any info on filing this way.  

[sjrcpa · Accepted solution]

You did something wrong. If the total distributions were used to pay qualified edcucation expenses your input for the amount of education exps must be wrong.

[sjrcpa]

Or what @taxiowa said