Is there a problem with claiming the American Opportunity Credit?

[user17724764610]

for 2025, Form saying dependent isn't qualified

[Vanessa A · Accepted solution]

If you are being told a dependent doesn't qualify for the American Opportunity Tax Credit, it is likely due to the way you answered one of the questions or a box you checked. Is the student an undergrad or graduate student?  The AOTC is only available for the first four years of higher education. So if they are a graduate student, you would not be able to claim the AOTC, but you could claim the Lifetime Learning Credit possibly.  If you are sure they are eligible, go back and double check your answers to be sure that they are accurate. 

American Opportunity Tax Credit.

• Available for the first 4 years of college
• Max amount is $2,500 per student
• Partially refundable credit meaning if your tax liability is $0, 40% (up to $1,000) is refundable
• Be enrolled in a degree or credential seeking program
• Not have a felony drug conviction
• Be enrolled at least half time
• Cannot be claimed as a dependent on anyone else's return. (if you are claimed as a dependent the person claiming you may be able to claim the credit)
• To claim the full credit, your modified adjusted gross income (MAGI) must be $80,000 or less ($160,000 or less for married filing jointly).
• You receive a reduced amount of the credit if your MAGI is over $80,000 but less than $90,000 (over $160,000 but less than $180,000 for married filing jointly).
• You cannot claim the credit if your MAGI is over $90,000 ($180,000 for joint filers).

Lifetime Learning Credit

• You can take this for an unlimited number of years
• Twenty percent of expenses up to $2,000 that are paid directly to the school
• Non-Refundable meaning this can reduce the amount of taxes you owe, but if your tax liability is less than the LLC, your tax will be reduced to $0 and the rest of the credit is lost. 
• Cannot be claimed as a dependent on any one else's return (if you are claimed as a dependent the person claiming you may be able to claim the credit)
• Be enrolled for at least one academic period beginning in the tax year. Academic Period can be semesters, trimesters, quarters, or any other period of study such as a summer school session. The school determines academic periods. For schools that use clock or credit hours and do not have academic terms, the payment period may be treated as an academic period.
• Be enrolled or taking courses at an eligible educational institution.
• Be taking higher education course or courses to get a degree or other recognized education credential or to get or improve job skills.
• To claim the full credit, your modified adjusted gross income (MAGI) must be $80,000 or less ($160,000 or less for married filing jointly).
• You receive a reduced amount of the credit if your MAGI is over $80,000 but less than $90,000 (over $160,000 but less than $180,000 for married filing jointly).
• You cannot claim the credit if your MAGI is over $90,000 ($180,000 for joint filers).
• You cannot be Married Filing Separately