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Solved

American Opportunity Credit

Forum|Forum|4 years ago
January 31, 2022
4 replies
0 views

Does the credit only apply to the first four calendar years or the first four years of equivalent credit?

On TurboTax, it says to select no for completing the four years if I haven't completed the equivalent about of credit. I have been going for about 6 years, but the last couple years were part time and I did not obtain the 120 credits that is typical of a senior or 4 year degree. Everywhere else by TurboTax I see that it is first four years of college PERIOD. Any help would be great!

TurboTax Deluxe Online

Best answer by MinhT1

The American Opportunity credit is available if you have not completed the first four years of of higher education, but you are only allowed to claim it for a maximum of four tax years.

If you have not completed your four years of credit and have previously claimed the credit less than four times, you may be eligible.

The IRS says:

To be eligible for AOTC, the student must:

Be pursuing a degree or other recognized education credential
Be enrolled at least half time for at least one academic period beginning in the tax year
Not have completed the first four years of higher education at the beginning of the tax year
Not have claimed the AOTC or the former Hope credit for more than four tax years
Not have a felony drug conviction at the end of the tax year

@skadizzie

I have edited my answer.

[Edited 01/31/22 | 7:32AM PST]

MinhT1Answer

The American Opportunity credit is available if you have not completed the first four years of of higher education, but you are only allowed to claim it for a maximum of four tax years.

If you have not completed your four years of credit and have previously claimed the credit less than four times, you may be eligible.

The IRS says:

To be eligible for AOTC, the student must:

Be pursuing a degree or other recognized education credential
Be enrolled at least half time for at least one academic period beginning in the tax year
Not have completed the first four years of higher education at the beginning of the tax year
Not have claimed the AOTC or the former Hope credit for more than four tax years
Not have a felony drug conviction at the end of the tax year

@skadizzie

I have edited my answer.

[Edited 01/31/22 | 7:32AM PST]

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skadizzleAuthor

This is the part that confused me. This is from TurboTax directly.

How do I know if I have 4 years of college credit?

Your educational institution can tell you if you've been awarded four years of college-level credit before the current tax year. If you didn't earn this amount, then you may still be eligible for the American Opportunity Credit.

▸ When should I answer "Yes"?

▾ When should I answer “No”?

Choose No if:

You didn't earn four years of college credit before the current tax year, even if you attended college for four years or more

Hal_Al

Employee

Q. Does the credit only apply to the first four calendar years or the first four years of equivalent credit?

A. The first four years of equivalent credit

Answer no to that question, since you did not obtain the 120 credits required for a 4 year degree at your school.

But, beware of another rule: you are limited to claiming the AOC four times, including the times your parent claimed it, on your education, while you ere their dependent. If you've been in school 6 years, you may have already got your 4 times.

skadizzleAuthor

That was my thinking exactly. I just don't want to get audited. I looked back and the credit didn't start until 2010 and I was already out of school in 2009. I just started going back last year.

Hal_Al

Employee

The AOC is a successor to the "Hope" Credit. If your parents claimed the Hope Credit, those times count against your 4 time limit for the AOC

pammiepw

I paid 6000 in tuition and had 10000 in scholarships. Turbo tax is saying I don’t qualify because the aid exceeds the expenses. That’s not true. The aid exceeds the payment amount. The expenses were 16,000. Nothing I find says I don’t qualify. Can anyone help with this?

Hal_Al

Employee

@pammiepw What were the $16,000 in expenses?

How much for Tuition and fees?

How much for room & board?

How much for books, computer and other course materials?

What's in boxes 1 and 5 of your 1098-T?

pammiepw

The 6,000 was tuition (box 1). 10,000 is in box 5. So, I have a question. If someone pays $20,000 but gets $22,000 in scholarships, are they excluded while someone paying only $10,000 with $8000 in scholarships isn’t? This seems odd to me.

stantonporsche

Employee

Do you have to file as an INDEPENDENT in order to claim the AOTC. I made 12K last year.

My parents make to much money, over 100K a year and hence cannot get any sort of educational credit if the put me as dependent on their taxes.

Hal_Al

Employee

Q. Do you have to file as an INDEPENDENT in order to claim the AOTC?

A. Simple answer: Yes.

But, you're not allowed to file as independent, if you don't qualify as independent. That is, even if you parents don't claim you, you must still check the box on form 1040 that says they CAN claim you.

https://ttlc.intuit.com/community/dependents/help/when-do-i-have-to-answer-yes-to-being-claimed-as-a...

While technically there is a provision that allows your student-dependent to claim a federal tuition credit, from a practical matter it seldom works out. A student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit (AOTC) if he/she supports himself by working. She cannot be supporting herself on student loans & grants and 529 plans and parental support. It is usually best if the parent claims that credit.

If the student actually has a tax liability, there is a provision to allow him to claim a non-refundable tuition credit. But then the parent must forgo claiming the student as a dependent, and the $500 other dependent credit. The student must still indicate that he can be claimed as a dependent, on his return. This is worth up to $2500 (AOTC shifts to all non refundable). With only $12K of work income, you will not have a tax liability.

$12K is unlikely to be be more than half you support. The support value of the home, provided by the parent, is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants.

The IRS has a worksheet that can be used to help with the support calculation. See: http://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf

Scholarships are ignored in the support calculation.