Non-Dependent daughter and American Opportunity Credit

[CynthiaM]

My daughter finished her undergraduate degree in May 2020. Due to Covid she has moved in with her boyfriend and has done some consulting work and attended a few on-line classes to figure out her next steps for a career. When I added her 1098-T for the "post-grad" classes, I am not certain whether I should check the "Graduate" box or not. If I check the box, she loses the AOC credit ($1,000); if I uncheck the box, she gets the $1,000 refundable credit. Which is correct? She is not officially accepted into a graduate program, she was just taking a class to see if she wanted to continue to pursue a Master's degree. FWIW, we filled out the IRS Interactive App and it said that she was eligible. (She pays all fees and some living expense from her trust funds). 

[ReneeM7122]

The tax return is for 2020.  It isn't relevant if she is not in school now, and it applies to her undergraduate degree only.  Once she is enrolled in a MA program she's no longer eligible for the credit. 

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.

Here is a TurboTax article about the American Opportunity Credit.

[Hal_Al]

Since she did not graduate until May, 2020, she may claim the AOC.  This assumes that you and she had not already claimed it a total of  4 times in the past.  But, she may only count undergrad expenses in claiming the AOC.

Do not check the graduate box.