I graduated college in 3 years and I'm in my 4th y...
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alexeadams298
New Member

I graduated college in 3 years and I'm in my 4th year of higher education, but first year of graduate school. Do I qualify for the American Opportunity Credit?

I've never received this credit before and this is my first time filing as an individual and not a dependent.
2 Replies
Hal_Al
Level 15

I graduated college in 3 years and I'm in my 4th year of higher education, but first year of graduate school. Do I qualify for the American Opportunity Credit?

Q.  I graduated college in 3 years and I'm in my 4th year of higher education, but first year of graduate school. Do I qualify for the American Opportunity Credit?

A. No. Graduating means you have completed  first 4 years of postsecondary education. See wording from Pub 970 below

 

You said: "I've never received this credit before and this is my first time filing as an individual and not a dependent".

The times that the parent claimed the AOTC, on your education, counts against your 4 times. 3 academic years usually equals 4 calendar years.  So, they may have already claimed it the maximum 4 times. 

 

[EDIT] As noted by @RayW7 , if you attended both undergrad  and graduate school, in 2020, you can still claim the AOTC for 2020, because you had not completed your  4 years before the beginning of 2020.

 

From IRS Publication 970

As of the beginning of 2020, the student had not completed the first 4 years of postsecondary education
(generally, the freshman through senior years of college), as determined by the eligible educational institution. For this purpose, don't include academic credit
awarded solely because of the student's performance
on proficiency examinations.

 

Completion of first 4 years. A student has completed
the first 4 years of postsecondary education if the institution at which the student is enrolled awards the student 4 years of academic credit at that institution for coursework completed by the student before 2020. This student generally wouldn't be an eligible student for purposes of the American opportunity credit.

 

Hadn't completed the first 4 years of postsecondary education (generally, the freshman through senior years) in an earlier tax year.

 

 

RayW7
Employee Tax Expert

I graduated college in 3 years and I'm in my 4th year of higher education, but first year of graduate school. Do I qualify for the American Opportunity Credit?

Yes, Under the following conditions a student that 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.  Provided they meet the eligibility requirements below.

 

Eligibility requirements

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. 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.
  • 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. 

 

You can claim the American opportunity credit for only four tax years, and you can't claim it if you've finished your first four years of post-secondary school before the start of the year. However, this leaves open the possibility of using the American opportunity credit for your first semester of grad school if you graduated in the spring and started graduate school in the fall and if that tax year is no more than the fourth year you have claimed the credit. The advantage to claiming the American opportunity credit is that the $2,500 maximum credit is larger than the other tax breaks and up to 40 percent is refundable, which means that even if you don't owe any taxes, you'll get up to a $1,000 refund. The other advantage is you include the cost of books and other supplies when figuring the credit.

 

Graduate school's expensive, so any tax breaks you can drum up to offset your costs are always welcome. Generally, graduate students -- or those claiming them as a dependent -- won't be able to claim the American opportunity credit but will still be eligible for the tuition and fees deduction and the lifetime learning credit.

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