American Oppertunity Credit

Forum|Forum|5 years ago
February 27, 2021
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My Grandaugter has recieved $1,000 for the past four years and this has stopped. Instead she getting $4,000 max. deductible. Is this in lew of the American Oppertunity Credit?

Not A Product Question

Bsch4477

Employee

If she got the American Opportunity Credit for 4 years she cannot get it any longer but she may be eligible for Lifetime Learning Credit.

Hal_Al

Employee

Yes, there is a 4 time limit to claiming the American Opportunity Credit. So, TurboTax will defer to one of the other options. The Lifetime Learning Credit (LLC) is 20% of the tuition paid, up to $10,000 (max $2000 credit). But that credit is non-refundable. It can only be used to reduce her actual calculated tax.

For somebody with low income, it would not be unusual for TurboTax to select the $4000 Tuition and Fees Deduction (TFD) instead of the LLC.

But, there may be a bigger question here: why was the student claiming the American Opportunity Credit (AOC), instead of the parents (or you if she was your dependent). It was worth up to $2500 per year to them. Furthermore, most college age (under 24) students are not technically eligible for the refundable portion (the $1000) of the AOC unless they are an orphan or married, filing a joint return.