I am hoping someone can explain why I only got to use 1,000 of the American Opportunity credit on my 1040 instead of the full amount of 2500. The 1000 came from the 8863 (2024)

• TurboTax Free Edition Online

‎June 6, 20199:46 AM

While the total amount of the AOC is worth up to $2,500, only $1,000 of the AOC is actually refundable. This means you can use the other portion to reduce your tax liability if you have any. But, only $1,000 can be directly added to your refund without any tax liability.

Because of this its also reported on two separate lines on your return - one line (Form 1040A Line 33 or Form 1040 Line 50) for the potion that reduces tax liability and one line (Form 1040A Line 44 or Form 1040 Line 68) for the refundable portion.

While the total amount of the AOC is worth up to $2,500, only $1,000 of the AOC is actually refundable. This means you can use the other portion to reduce your tax liability if you have any. But, only $1,000 can be directly added to your refund without any tax liability.

Because of this its also reported on two separate lines on your return - one line (Form 1040A Line 33 or Form 1040 Line 50) for the potion that reduces tax liability and one line (Form 1040A Line 44 or Form 1040 Line 68) for the refundable portion.

Q.Shouldn't I also get the other $1000 credit?

A. Yes, you're just looking in the wrong place.

The American Opportunity Credit (AOC) comes in two pieces; $1500 (max) on line 20 of form 1040 (via Schedule 2) and $1000 on line 29. Both pieces transfer from form 8863.

The 2nd piece is on a different line, because it's refundable. The $1500 piece isn't. It can only be used against an actual tax liability.