Non-Dependent daughter and American Opportunity Credit

Forum|Forum|5 years ago
March 11, 2021
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My daughter finished her undergraduate degree in May 2020. Due to Covid she has moved in with her boyfriend and has done some consulting work and attended a few on-line classes to figure out her next steps for a career. When I added her 1098-T for the "post-grad" classes, I am not certain whether I should check the "Graduate" box or not. If I check the box, she loses the AOC credit ($1,000); if I uncheck the box, she gets the $1,000 refundable credit. Which is correct? She is not officially accepted into a graduate program, she was just taking a class to see if she wanted to continue to pursue a Master's degree. FWIW, we filled out the IRS Interactive App and it said that she was eligible. (She pays all fees and some living expense from her trust funds).

TurboTax Home & Biz Windows

ReneeM7122

The tax return is for 2020. It isn't relevant if she is not in school now, and it applies to her undergraduate degree only. Once she is enrolled in a MA program she's no longer eligible for the credit.

A student eligible for the American Opportunity tax credit:

Has not completed the first four years of post-secondary education.
Enrolls in at least one academic semester during the applicable tax year.
Maintains at least half-time status in a program leading to a degree or other credential.
If the student has ever been a state or federal criminal because of a drug conviction, then he/she isn’t eligible for the tax credit.

Here is a TurboTax article about the American Opportunity Credit.

Hal_Al

Employee

Since she did not graduate until May, 2020, she may claim the AOC. This assumes that you and she had not already claimed it a total of 4 times in the past. But, she may only count undergrad expenses in claiming the AOC.

Do not check the graduate box.