I have claimed the American Opportunity Credit for 3 years prior and now it's not letting me claim the 4th. What changed and how do I fix this? I really need help.

Forum|Forum|5 years ago
April 7, 2021
2 replies
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I have a full tuition only scholarship and pay room and board myself through work-study. Every year, the schools' cost of attendance rises and my scholarship combined and the work study are not enough to pay my school expenses. Before I never had an issue claiming this credit but this year's taxes (2020) is proving to be difficult.

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KrisD15

If you have enough expense to claim the credit, please go back through the education interview.

Chances are the screen about which year of the degree you are in is he culprit.

You can be in the 5th year of school, but still only the 3rd or 4th year of the degree.

Make sure you are not saying the degree was earned PRIOR to 01-01-2020

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lanasia99Author

This is not trippng me up. Is earning too little money something that could affect this. Because of COVID, I earned only an 1/8 of what I usually do.

Hal_Al

Employee

Yes, earning too little money is something that could affect this. The AOC is only 40% refundable. the other 60% can only be used to reduce an actual tax liability. Furthermore, a full time unmarried student, under age 24, even if you don't qualify as a dependent, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working. You cannot be supporting yourself on parental support, 529 plans or student loans & grants. You usually must have actually paid tuition, not had it paid by scholarships & grants. It is usually best if the parent claims that credit.

Hal_Al

Employee

@lanasia99 said "I have a full tuition only scholarship"

If your tuition is fully covered by scholarship and that scholarship is restricted to only be able to be used for tuition, you have no expenses that would allow you to claim the American Opportunity Credit. Room and board are not qualified expenses for the AOC.

@lanasia99 said " I have claimed the American Opportunity Credit for 3 years prior"

You may have done it wrong for the last three years. On the other hand, if your scholarship is not restricted, then the way to claim the AOC, is to designated some of the scholarship (up to $4000) as paying for room and board. That part of your scholarship will be taxable income to you, but it frees up tuition, that is no longer paid by tax free scholarship, to be claimed for the AOC.

lanasia99Author

I think the issue is that the scholarship/grant part includes my pell grant which is for room and board as well as the institutional aid while the 1098-t only includes the amount I pay based on the institutional aid.