Why would a T2202A create a tax owing?

[ajdime]

My daughter is self employed but went to college back in 2014. (She was 18).

Our previous accountant filed her taxes and I went back to review them due to tons of errors in other parts.

When I went to test / redo the taxes as he did them, I entered her income as 10,500 (what he said) and entered the T2202A form.

At $10,500, she would NOT owe taxes, as she is within the threshold.

However, when we added the T2202A form... it suddenly said she OWED $756 in taxes.

What I'm struggling to understand:  We PAID her tuition cash. She did not take a loan / osap or anything... why on earth would it cause her to PAY taxes?

AND... it was even transferred to me to take the write off - and it STILL said she owed $756.

Completely stumped. Why on earth would this be??

It was NOT income in any way, but it's like it added it against her.

[TurboTax-Duncan]

Hi, thank you for using Intuit turbotax Live Community

If a student was in attendance at full time post secondary education for more than 13 weeks in the year they would not be eligible for the Working income tax benefit.

So in this scenario there is no tax owing but there is Canada pension plan (CPP) contributions owing, (line 421 of the T1). The Working income tax benefit (WITB), Line 453 of the T1, covers this balance until the T2202A information is entered. Once greater than 3 months of full time education is entered, the person is no longer eligible for the WITB). This then results in a balance owing. See this CRA link for details:

https://www.canada.ca/en/revenue-agency/services/child-family-benefits/witb-eligibility.html

Hope this helps

[ajdime]

But if she was below the threshold of earnings in the first place, she still wouldn't be charged taxes I wouldn't think? (And she was 19, and in school for 12 weeks Sept - December, wasn't 13 weeks because of week off in between and they ended like the first week of December as well) but not sure how the govt views it.