Error in American Opportunity Credit

Forum|Forum|5 years ago
February 22, 2021
2 replies
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I am working on my daughter's return, and it is saying that she does not qualify for the American Opportunity Credit. One of the reasons listed, which appears to be the issue in her case, is that you may not qualify "If someone else can claim you as a dependent." Turbotax appears to interpret this to mean that she can't take the credit if I CAN claim her as a dependent, regardless of whether I actually do claim her. However, IRS Publication 907 clearly states that if you don't claim a dependent on your return, even if you are entitled to claim them, then they can claim the American Opportunity Credit on their own return.

Is there a way to fix this, or would she simply have to answer "No" to the question of whether someone can claim her, even though I CAN claim her?

Hal_Al

Employee

If the student actually has a tax liability, there is a provision to allow her to claim a 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 she can be claimed as a dependent, on her return.

While technically there is that provision that allows your daughter to claim a 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 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.

smag873Author

I think I was missing the requirement that she must support herself by working in order to qualify for the refundable credit. Thanks.

smag873Author

Update - I realized that the check box indicating that she was being claimed as a dependent had inadvertently been checked, so I unchecked that and it said she qualified for the credit, but when it then checked to see which credit was better, the American Opportunity Credit or Lifetime Learning Credit, it still ended up saying she didn't qualify. One of the possible reasons listed was no taxable income, but the American Opportunity Credit is partially refundable, so she should be able to get that even if she owed no taxes.

Bsch4477

Employee

As @Hal_Al pointed out she can’t get the refundable part of the AOC since she doesn’t support herself. That’s why it is better for you to claim it if you are otherwise eligible to do so.