☰
✕
Sign In

Why sign in to the Community?

  • Submit a question
  • Check your notifications
Sign in to the Community or Sign in to TurboTax and start working on your taxes
New Member
posted Jun 6, 2019 12:02:57 AM

Should I amend 2014 & 2015 returns to remove American Opportunity (8863) credit to get much better credit in 2018 & 2019 instead?

My daughter took some college courses while in high school. The American Opportunity credit (see form 8863) in those years was much smaller than the credit would be now that she's enrolled full-time.

I'm wondering if I should amend 2014 & 2015 returns, to remove the American Opportunity credit in those years, so that I can use it during 2018 & 2019. Realizing that I will pay more taxes on the amended returns, but much less on the new returns because the credit is drastically (~$2-3k) larger now. She will still qualify as a full-time student working towards a bachelor's degree.

Is it okay to amend 2014? I read somewhere that 3 years was the rule of thumb. Are there audit risks with amending? Does this plan work for the American Opportunity credit?

Thank you!

0 4 2804
1 Best answer
New Member
Jun 6, 2019 12:02:59 AM

Yes, I believe you can, and should, amend both your 2014 and 2015 federal income tax returns, surrendering your claim of the American Opportunity Tax Credit with respect to your daughter for those two years.

While you are correct that the general rule is that an income tax return cannot be amended more than the later of three years after its due date or two years after the tax was paid, that applies only to amendments which include a claim for a credit or refund. Since you will be voluntarily amending to pay more tax for those years, the time limit does not apply. Amending a return does not automatically trigger an audit or necessarily increase your chance of audit selection.

I think there exists a valid argument that you may have taken the AOTC in good faith, but in error, for 2014 and 2015. One of the requirements for the AOTC is that the student be enrolled at least half-time in a program leading to a degree. Most high school students who take college courses are not carrying a half-time college credit load, nor are they yet formally enrolled in a degree-granting program. If your daughter was in that situation, she did not meet the qualifications for the AOTC. That will be your stated reason for amending the returns.

Please be aware that the IRS processes Forms 1040X slowly. It may take as much as ten weeks for an amendment to be reflected in your tax records. For this reason, I would suggest that you wait as long as possible, yet within the filing deadline of April 15, to file your 2018 tax return, to minimize the possibility that the IRS will generate a notice that you have claimed the AOTC for more than four years for your student.

4 Replies
New Member
Jun 6, 2019 12:02:59 AM

Yes, I believe you can, and should, amend both your 2014 and 2015 federal income tax returns, surrendering your claim of the American Opportunity Tax Credit with respect to your daughter for those two years.

While you are correct that the general rule is that an income tax return cannot be amended more than the later of three years after its due date or two years after the tax was paid, that applies only to amendments which include a claim for a credit or refund. Since you will be voluntarily amending to pay more tax for those years, the time limit does not apply. Amending a return does not automatically trigger an audit or necessarily increase your chance of audit selection.

I think there exists a valid argument that you may have taken the AOTC in good faith, but in error, for 2014 and 2015. One of the requirements for the AOTC is that the student be enrolled at least half-time in a program leading to a degree. Most high school students who take college courses are not carrying a half-time college credit load, nor are they yet formally enrolled in a degree-granting program. If your daughter was in that situation, she did not meet the qualifications for the AOTC. That will be your stated reason for amending the returns.

Please be aware that the IRS processes Forms 1040X slowly. It may take as much as ten weeks for an amendment to be reflected in your tax records. For this reason, I would suggest that you wait as long as possible, yet within the filing deadline of April 15, to file your 2018 tax return, to minimize the possibility that the IRS will generate a notice that you have claimed the AOTC for more than four years for your student.

New Member
Jun 6, 2019 12:03:00 AM

Thank you! I really appreciate the time you took to give that much detail.

New Member
Jun 6, 2019 12:03:02 AM

You are most welcome. Intuit always wants to delight our customers. If you need a detailed answer to a complex question, I am happy to take the time to provide that.

New Member
Jun 15, 2019 3:13:53 PM

Hello, I found the answer to this question interesting because I am in a similar situation. I just wondered though: if I amend my 2016 return to remove the AOTC so that I can free it up for another year, will the IRS impose a penalty? I assume there will be interest too? Thank you!