Are you able to receive the AOTC if you have not worked all year, but have been attending school?

[Opus 17 · Accepted solution]

The AOTC has a $1000 portion that can be refunded even if you don't work or pay taxes, but to qualify you have to over age 24, or if you are 23 or under, both your parents have to be dead.  Otherwise, it is assumed that you will be a dependent of your parents and your parents can claim the credit.

[Tjo716]

Why is it assumed that you will be a dependent of your parents and your parents can claim the credit?  The parents MAGI could be high enough that the credit is phased out.  Therefore, it would make sense for the parents not to claim you as a dependent and not take the credit.

[Hal_Al]

Q. Why?

A. Because that's how the law was written.

Q. Therefore, it would make sense for the parents not to claim you as a dependent and not take the credit.

A. That's why the law is written the way it is; so that rich parents couldn't try to shift the credit over to their students.  

It actually has nothing to to with dependency. It has to do with how the student supports himself.   A full time unmarried student, under age 24, even if you don't qualify as a dependent, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working (with earned income).  You cannot be supporting yourself on parental support, 529 plans or student loans & grants. You usually must have actually paid tuition, not had it paid by scholarships & grants.  

If the student actually has a tax liability, there is a provision to allow him to claim a non-refundable tuition credit. But then the parent must forgo claiming the student as a dependent, and the $500 other dependent credit.  The student must still indicate that he can be claimed as a dependent, on his return.

https://ttlc.intuit.com/questions/3936383-tuition-gift-to-children

[Tjo716]

Thanks for the response...much appreciated.

So why is this "supports himself" issue not part of Form 8863 for the AOC?

R/Tom

[Hal_Al]

It's covered in the instructions for form 8863.  https://www.irs.gov/pub/irs-pdf/i8863.pdf

In particular, see instructions for Line 7.

[Tjo716]

That's pretty definitive.  Thanks very much for your expertise.  Seems like not many students can take advantage of the AOC.  

I guess I'll claim him as a dependent.

R/Tom