American Opportunity and lifetime credit

[taxpayer92]

Hello,

I was on F-1 OPT in 2019. I married to Green card holder in mid 2019 and also finishes my 5 years on F-1 visa in July 2019. I did my masters from 2014 to 2016 and right now doing my second master having 1098-T from current university. I'm married filing jointly with my wife as primary filer. My question is Can I claim American Opportunity and lifetime credit on my tax form? Or Is there any consequences? 

[KurtL1]

No, you are not eligible to receive the American Opportunity Credit (AOC). If you have completed four years of undergraduate studies, you cannot take the AOC credit. You are eligible to take the Lifetime Learning Credit. or the Tuition and Fees Deduction, whichever one gives you the greatest benefit. You are only allowed to claim one of the educational benefits in any one tax year.

You said you completed your 5-year exemption J-1 exemption in July 2019. That would mean you entered the U.S. in 2014. Per the IRS you ended your exemption period on 12/31/18. The rule states, "Part of any 5 years". Once you were present 31 days in 2019 and a total exceeding 183 days in 2019 you became a resident alien per the Substantial Presence Test.

[taxpayer92]

But I didn't completed my 4-year degree in United states and never claimed American Opportunity and lifetime credit from 2014 when i came in U.S. And one more correction to your response, I'm on F-1 not J-1.

[KurtL1]

The exempt rules are also 5 years on the F-1 Visa.  

If you are taking courses toward your Master’s degree Box 9 on the Form 1098-T  will be marked.

Have box 9 marked will make you ineligible to take the American Opportunity Credit. In the United States, you need to have a 4-year Bachelor degree to study for your Master’s degree.

[benbmw1028]

Hi Kurt, I believe it is incorrect that box 9 being checked will itself disqualify you from being eligible for the AOTC. See question 13 from the AOTC Q&A on IRS.gov shown below:

Q13. If a student was an undergraduate during the first part of the taxable year and became a graduate student that same year, will the student qualify for the American opportunity tax credit?

A. If a student has not completed the first four years of post-secondary education as of the beginning of the taxable year, and has not claimed the Hope scholarship credit and/or the American opportunity tax credit for more than four taxable years, the student can claim the American opportunity tax credit for qualified expenses paid during the entire taxable year.

For example, my wife completed her undergrad in 3 years and is finishing up her masters this May. So at the beginning of 2019 she was still an undergrad (had not completed the first four years of post-secondary education), May 2019 she graduated with her Bachelors, and August 2019 she started her graduate degree. Her 2019 1098-T has her total tuition expenses(some from undergrad and some from grad) in box 1 and has box 9 checked.

[KurtL1]

You are correct. You will be able to take the AOC for all the expenses on the 1098-T. This would include the expenses paid for the graduate tuition. The only requirement to be eligible for the AOC is that the student had not completed four years of school at the beginning of the year.

Remove the entry in box 9 before you file your return.