Is a Computer a Qualified Expense for AOTC

[alan21]

Publication 970 says, "equipment needed for a course of study" is a qualified expense.  Not sure if schools technically "require" a laptop, but I don't see how any college student can get by without one with so much schoolwork being submitted online.  A laptop definitely seems "needed" to survive college today.  Does anybody have any insight on how the IRS views this today and whether a laptop (very much needed) can be claimed as a qualified expense for the American Opportunity Tax Credit?  Thanks.

[Hal_Al]

You're not going to get a clear cut answer. 

The IRS says:  "Whether an expenditure for a computer qualifies for the credit depends on the facts. An expenditure for a computer would qualify for the credit if the computer is needed as a condition of enrollment or attendance at the educational institution". 

 https://www.irs.gov/newsroom/american-opportunity-tax-credit-questions-and-answers

Apparently, the tax court has ruled on this. 

https://www.currentfederaltaxdevelopments.com/blog/2016/8/25/purchase-of-computer-from-local-retaile...

The Tax Court concluded that the cost of a computer is not eligible for the AOTC unless the school requires the student to have one.

Some have translated this to:  The IRS has indicated a computer does qualify if it is needed for attendance at the educational institution. Generally, in this day and age, a computer is necessary ("required" & "needed").

Be assured: "everybody is doing it". 

While a computer is a qualified expense for the AOTC and a 529 plan distribution, it is not a qualified expense for the Lifetime Learning Credit (LLC).

[DaveF1006]

Yes, a laptop is a qualified expense for the American Opportunity Credit because no student can complete their coursework without it.

[anonymouse1]

I just got the 1098-T for 2022, when our youngest started college.  I put in the numbers from the 1098-T and added local scholarships she got that weren't on the form.  Now TT is saying we don't qualify for the entire credit, because only $3677 was qualified after scholarships!  I could have her claim $323 as taxable scholarships, but we paid almost $1700 for a computer which I was sure would qualify for the AOTC.  The TT worksheet is showing that line "computer expenses" not qualified for AOTC.  But $137 of her books required to be purchased from the university were digital textbooks, they can't expect her to read those (and submit papers) on her phone!  How do we get the computer counted for the AOTC?  Though she won't owe tax, I hate to have her claim $323 of a scholarship as taxable in order to max out the $4000 QHEE for AOTC, because I think that will affect her aid next year when we fill out the FAFSA.

[Hal_Al]

Add the $1700 for a computer to the $137 required books and enter there.  lying to TurboTax to get it to do what you want does not constitute lying to the IRS.

[anonymouse1]

I'd have to add it to the required books that were bought elsewhere, since the computer wasn't purchased from the school, only the $137 in digital textbooks were.