The eligibility criteria for the American Opportunity Tax Credit are listed below. A thorough review of IRS Pub. 970 Tax Benefits for Education does not support any exception based on the conferral of a bachelor's degree by a foreign institution. You should consider the Lifetime Learning Credit.
To be eligible for the American Opportunity Tax Credit (AOTC), the student must:
- Be pursuing a degree or other recognized education credential;
- Be enrolled at least half time for at least one academic period (semester, quarter, etc.) beginning in the tax year;
- Not have finished the first four years of higher education at the beginning of the tax year;
- Not have claimed the AOTC or the former Hope credit for more than four tax years; and
- Not have a felony drug conviction at the end of the tax year.
Click this link for more detailed information about the American Opportunity Tax Credit.
As per IRC Section 25A(b)(2)(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."
The question now is what is an "eligible educational institution"? What if my postsecondary education was obtained at an ineligible institution? Per IRC Section 25A(f)(2), The term “eligible educational institution” means an institution—(A) which is described in section 481 of the Higher Education Act of 1965 (20U.S.C. 1088), as in effect on the date of the enactment of this section, and (B) which is eligible to participate in a program under title IV of such Act.
If the foreign institution is ineligible, according to the law, which can be verified in the FAFSA link <a rel="nofollow" target="_blank" href="https://fafsa.ed.gov/FAFSA/app/schoolSearch">https://fafsa.ed.gov/FAFSA/app/schoolSearch</a>, then the AOC is OK as long the degree is not a post-graduate or an ineligible program.
This individual did not complete a 4-year degree at an eligible institution, period. The taxpayer is using those foreign credentials for admission to his/her first 4-year at an eligible one. He/she never claimed the AOC before and never completed an eligible 4-year before.