Office 365 connection fails. Unable to authenticate (4276095)

While creating a O365 connection, you may come across the error below, even though the credentials you are using are correct.

Cannot connect or get schema

Details:

Cannot perform the required operation, because an Office 365 cmdlet has returned the following error. Unable to authenticate your credentials. Make sure that your user name is in the format: @.

SOLUTION

1) Make sure outgoing/incoming DNS ports are open: UDP/TCP 53 to onmicrosoft.com

2) Verify the Quick Connect server has DNS server entry that allows forwarding outside of your local domain.