Why is TurboTax adjusting the Tuition Transfer based on our son's income?

[pcmoan1]

We pay for our son's university tuition and I am confused as to what TurboTax is doing with regards to the the credit.

Students can transfer up to $5,000 federally. These amounts are reduced by the portion of this year’s tuition and education amounts that the student used on his or her own return.

There is nothing I've read that indicates that the transfer amount is reduced based on the student's income, yet this appears to be what is happening in the parent's TurboTax return.

Our son works part-time while attending university. His net income was$17,000. After keying in his T2202 information, TurboTax told him he could transfer $4400 (federal) and $2400 (provincial) to his parent(s).

When filling out the parents return (i.e., my wife and I), I keyed in my son's net income of $17,000 under "Tell us about your Dependants". On this page, I keyed in his Net Income exactly what appears on our son's return on line 23600. No other deductions or credits are applicable.

On the page titled "Tuition Transfer Amount", I keyed in the amount of Tuition Fees we paid which was $6200 (i.e., Line 9 of my son's Schedule 11). I also correctly specify the # of part time and full time months, and include amounts for the 2020 carryover for federal/provincial.

When on the same "Tuition Transfer" page, I clicked on the "Tuition Transfer" button. I expect to see an amount of $4200 displayed for the federal amount (which would correspond to what TurboTax told our son that he could transfer to his parents.). Instead I see an amount of $2500 for the federal amount, and a reduced amount for provincial as well.

As an experiment, I returned to the "Tell us about your dependence page", an dreduced my son's Net Income from $17,000 to $2,000. When I returned to Tuition Transfer Amount page, I see that the TurboTax has change the amount of tuition transferred from $2500 to something close to $5000.

In summary, both our son's TurboTax return and our own are using the same net income of $17,000. Why does our son's return tell us he do a federal transfer $4200 while my return says I can federal transfer $2500.

Thanks in advance for any help or insight into what is happening. As noted at the outset, there's nothing I've read that suggests the transfer amount is reduced by the child's income. I'd expect both our son's tax return and our own would have transfer amounts that would match.

Thanks in advance for any insight.

[damedave2]

I had a similar problem.  The tuition transfer amount on my daughter's tax form said $5,000, but on my tax form, I would have to claim $560 less.  Is this a glitch?

Thanks

[ksokolan]

Did you ever get an answer to this?

Turbo Tax 2020 and 2021 are doing the same thing to me.

The "leftover" amounts appear to show up as unused Tuition amounts Carry Forward on our daughters return?

Never had this before.

[pcmoan1]

Hello-

I signed up for 'expert help' (extra $65) and received the help I (you) needed.

Steps below assumes you're child earned income in 2021. If they did not, then these instructions are not relevant.

Navigate to Deductions->Additional Dependent Information (Tell us about your dependants)

That page will display info for each of your children.

Punch in your child's income as appropriate.

At the bottom of the section for each child you will see three text boxes labeled as follows:

1. Deductions from net income (T1, line 25700)
2. Federal non-refundable credits (T1, sum of lines 30300 to 31400)
3. Provincial non-refundable credits (Form NS428, sum of lines 58120 to 58400)

On your child's return these lines are non-zero, and you need to enter them in your return so you can accurately reduce your child's tax burden in your income tax return.

My mistake was when I printed off a PDF copy of my son's return it appeared to me that all these fields contained zero dollar amounts. However, when I when into my child's TurboTax return and displayed my child's "Detailed Tax Summary" I saw that some of these lines were non-zero. Keying in these figures into my return reduced my son's tax burden, and TurboTax allowed me to use more of the tuition amount specified on his T2022.

To quickly see you child's "Detailed Tax Summary" (showing values for each line number in their tax return) click on the link in the upper left hand corner of the display that reads "2021 TAX REFUND", then click on "View detailed tax summary."

Hopefully, this gets you on your way!

[pcmoan1]

Hello DameDave2 -

Please see my post above. That should help you.   

Best,

P.