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Can I file an amended return so to not claim a previously claimed AOC?

In 2020, my wife and I claimed our son’s fourth American Opportunity Credit (AOC).

 

On May 17, 2019, when my wife and I filed our 2018 joint return and his return, we claimed our son’s second AOC. It was only $1,600 because he only had $1,600 in adjusted qualified education expenses. (At the time, my wife and I believed our son would be unable to return to college for health reasons.)

 

After years of hard work, incredible perseverance, and the helpful hand of a gracious God, our son will be attending Virginia Tech full-time this Fall.

 

If not In 2022, then certainly in 2023, we expect our son to have over $4,000 in adjusted qualified education expenses resulting in a $2,500 AOC for us or for him; i.e., a $900 win, regardless.

 

My strategy is to file, on or before May 15, 2022, an amended 2018 return for (i) my wife and I, and (ii) my son, if doing so is beneficial or necessary, without claiming my son’s second AOC allowing him or us to claim his fourth AOC in 2022 or 2023.

 

Are there any IRS rules, regulations, or policies that might prevent this strategy from being successful?

 

Are there any reasons why I would not want to do this?

 

Thanks!

 

Q

 

 

 

 

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7 Replies

Can I file an amended return so to not claim a previously claimed AOC?

why did you reference May 15? did you file for an extension of the 2018 tax return originally?

Hal_Al
Level 15

Can I file an amended return so to not claim a previously claimed AOC?

The fact that you filed on May 17, 2019 does not give you three years from that date to file an amended 2018 return. You must  have filed for an extension to file your 2018 return.  If you did so, your plan should work.  After filing the amendment and paying the tax due, you can expect a bill from the IRS for late payment penalties and interest. That will wipe out about half of your $900 savings.  https://pocketsense.com/interest-penalties-amended-tax-return-19397.html

 

Instead of just unclaiming the AOC, you could claim the Lifetime Learning Credit, for 2018,   $1600 x 20% = $320.

 

Here's a post from another user who claims you can't do that, but does not cite a reference. https://ttlc.intuit.com/community/after-you-file/discussion/can-i-amend-a-prior-year-to-unclaim-the-...

Can I file an amended return so to not claim a previously claimed AOC?


@Hal_Al wrote:

 

 

Here's a post from another user who claims you can't do that, but does not cite a reference. https://ttlc.intuit.com/community/after-you-file/discussion/can-i-amend-a-prior-year-to-unclaim-the-...


Here's the problem.  The AOC is only available for the first 4 years of eligible post-secondary education.

"Available ONLY if the student had not completed the first 4 years of postsecondary education before 2021 (generally, the freshman through senior years, determined by the eligible educational institution, not including academic credit awarded solely because of the student's performance on proficiency examinations)"

https://www.irs.gov/publications/p970#en_US_2021_publink1000204317

 

It's also only available for the first 4 years or equivalent (bachelors or equivalent). Meaning, that if you get a bachelors in 3 years, you can only use the AOC for those 3 years and can't use it for a 4th year (either graduate school or a second bachelors).  But if you take 5 years to get a bachelors, you can only claim the AOC for the first 4 years.

 

What you are trying to do is take a child who will take 5 or more years for a bachelors degree, and pick and choose which 4 years to apply to the AOC, instead of applying the first 4 years.  

 

Unfortunately, the term "first 4 years" is baked into the legal statute itself.  (see below)

26 USC §25A(b)(2)(C)

 

 

Now, I wonder about 2018, when you claimed only $1600 in expenses, did the child attend at least half time?  Because if the child did not attend at least half time, then they were never eligible.  You can use the AOC for the first 4 years the child is an eligible student, and they must be enrolled at least half time to be considered an eligible student.  So if they were never eligible in 2018, you could file the amended return, admit that fact in the explanation section, switch to the Lifetime Learning credit (which does not require half-time enrollment) and pay the difference, and possibly regain a year of eligibility.

 

But if the child has been eligible 4 times, you can't rearrange the AOC to pick which years to use, according to the law it must be claimed the first 4 eligible years. 

 

https://www.law.cornell.edu/uscode/text/26/25A

(C) Credit allowed only for first 4 years of postsecondary education

The American Opportunity Tax Credit under subsection (a)(1) shall not be allowed for a taxable year with respect to the qualified tuition and related expenses of an eligible student if the student has completed (before the beginning of such taxable year) the first 4 years of postsecondary education at an eligible educational institution.

 

Can I file an amended return so to not claim a previously claimed AOC?

 

 

May 15, 2022, is significant because it is 2 days before the 3rd anniversary of filing our 2018 tax return on May 17, 2019.

 

 

Can I file an amended return so to not claim a previously claimed AOC?

 

@Hal_Al 

 

I will be considering your advice this evening or tomorrow and getting back to you accordingly.

 

Q

 

 

Can I file an amended return so to not claim a previously claimed AOC?

 

@Opus 17 

 

I will be considering your advice this evening or tomorrow and getting back to you accordingly.

 

Q

 

 

Can I file an amended return so to not claim a previously claimed AOC?

@QRFMTOA

 

<<May 15, 2022, is significant because it is 2 days before the 3rd anniversary of filing our 2018 tax return on May 17, 2019.>>

 

but unless there was an extension request back in 2019, it is beyond the 3 year window to submit refund requests.  That deadline was April 15, 2022 for the 2018 tax year (again, unles there was an extension request)

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