I took a fifth year of college before finishing my bachelor's degree in May of 2022. Am I still eligible for the American Opportunity Credit?

[Hal_Al]

Yes. If you had not completed the requirements for a  bachelor's degree, you had also not completed 4 years of post secondary education for purposes of the AOTC. 

The is also a limit of claiming the AOTC 4 times. Since 5 years of college typically takes place over 6 calendar/tax years, there's a possibility that you and/or your parents have already claimed the AOTC, on your education, the maximum 4 times. 

[ktcref]

I used TurboTax to file my 2022 tax return, and it allowed me to file for a fifth time for the same student. (My daughter was taking 5 years to complete her 4-year degree.) The IRS flagged it for review because this is an error; it only allows the credit to be filed 4 times for a given student, no matter how small the credit in each year. I'll have to pay back the $2,500 credit with interest. TurboTax should have caught this error. I've been using TurboTax continuously for more than 20 years.

[Hal_Al · Accepted solution]

As part of the interview, TurboTax (TT) asks you how many times, in the past, you have claimed the American Opportunity Credit (AOC).  The short coming,  in TT, is that it will allow you to continue if you don't answer that question.

You may be able to claim the smaller Lifetime Learning Credit (LLC) for 2022 and not have to pay back the full $2500.  The LLC is 20% of qualified expenses (tuition and fees only, no books or computers). Unlike the AOC, no part of the LLC is refundable (it can only reduce your tax liability). 

You say "it only allows the credit to be filed 4 times for a given student, no matter how small the credit in each year".  If your credit was less than $2500 in either 2020 or 2021, consider filing an amended return for that year, so that you can get the full AOC for 2022. 

[ktcref]

The TurboTax interview process did not ask me the number of years I have claimed the American Opportunity Credit (AOC) for my dependent student. If it had asked, I would have answered 4 times previously, in tax years 2021, 2016, 2015, and 2014. Perhaps the TT algorithm looked back a few years but did not look back far enough, and failed to ask about earlier years. It is too late to file an amended tax return for 2016 to cancel the relatively small AOC credit that year. I could not find an easy way to drop the AOC form in 2022 so that I can file an amended return and take the Lifetime Learning Credit instead of AOC. In any case, my return is being reviewed by the IRS and hopefully they can apply the Lifetime Learning Credit and bill me for the difference in 2022. 

[Critter-3]

Facts:

1) you already took the AOC 4 times

2) you filed incorrectly

3) the IRS has caught the error and will adjust the return ... they will NOT switch to the LLC automatically

4) once the original return has been fully processed and you have recieved the notice of correction  you can amend the return to take the other credit ... remember to adjust the return to reflect the IRS changes BEFORE you start the amendment process. 

[ktcref]

I only filed my return incorrectly because TurboTax failed to ask me whether I had taken the AOC. Looking at form 8863 page 2, I see that question 23, "Has the American opportunity credit been claimed for this student for any 4 prior tax years?", the answer is checked NO, whereas the actual correct answer is YES. TurboTax checked NO without my knowledge or consent. The interview process never asked me this question. I checked by re-doing the interview; it still never asks me. 

Now that I know the problem, to file an amended return, how do I tell TurboTax NOT to use the AOC form, and to use the Lifetime Learning Credit instead? The step-by-step interview process doesn't let me choose; I tried it over and over. I can view form 8863, but I don't see how to edit the form to change question 23 from NO to YES. 

[Critter-3]

Contact TurboTax support and speak directly with a TurboTax support agent concerning this situation.

See this TurboTax support FAQ for a contact link and hours of operation -https://ttlc.intuit.com/questions/1899263-what-is-the-turbotax-phone-number

[Hal_Al]

Go through the entire education interview until you reach a screen titled "Your Education Expenses Summary".  Click edit next to the student's name. That should take you to a screen “Here’s your Education Summary”. Click edit next to “Education Information”.

You will be given a chance to change any and all answers.

[ktcref]

I went through the interview again and I found the screen where you enter the number of years that the AOC was taken. I don't recall seeing this screen before, but I have to admit that I may have entered the wrong value previously. I entered the correct value, and TurboTax recalculated that tax correctly. Thanks for your help. I will work with the IRS to make the correction and pay the correct taxes.