What counts as four years of college credit?

[whodiini]

I am now very confused.  There are web sites that say you can use AOTC for graduate school, provided you did not attend 4 years of post secondary education.  The wording, while you imply that it is no longer valid if you received your bachelors, does not explicitly state that.  So if I got my bachelors in 3 years, did not use the AOTC at all, I would think I can use the AOTC for my first year of grad school. If that is wrong, can someone point to either a case where the IRS refused the AOTC or it explicitly says you cannot use it if you received a specific degree?

[AnnetteB6]

As long as you have not finished your first four years of post-secondary education at the beginning of the tax year, then assuming all other qualifications are met, you are considered to be an eligible student who can claim the American Opportunity Tax Credit.

See the following IRS information to learn more:

American Opportunity Tax Credit

@whodiini 
 

[Hal_Al]

Grad school doesn't normally qualify,   Grad school in the fall does count if the student finished his undergrad degree in the spring, The technicality is that you had not completed the first four years of post-secondary education as of the beginning of the taxable year.

https://www.irs.gov/credits-deductions/individuals/education-credits-questions-and-answers  Scroll down to Q.9.

Q. So if I got my bachelors in 3 years, did not use the AOTC at all, I would think I can use the AOTC for my first year of grad school.  Right?

A. No. The fact that you received a bachelors degree means you completed 4 yeas of school (you got 4 years worth of credits).

[whodiini]

These 2 answers from experts just proves my point how confusing this issue is. annetteb6 answer is how I interpret the rules.  So if I attend 3 years and get an undergraduate degree and then wait a few  years and go to grad school, the first year I would be eligible for AOTC. The IRS example where they say the first partial year of grad school is allowed if it falls under the fourth year to me means that whether you have a degree or not is relevant, what counts is the limit of 4 years of post secondary education. 

[whodiini]

If I go to school in the uk, undergraduate education is 3 years.  So if I complete a degree I got credit for 3 years of academic work.  So it would seem that I would qualify for one year graduate eligibility for AOTC

[Hal_Al]

UK?

This may be what you're looking for: https://ttlc.intuit.com/community/college-education/discussion/re-aoc-did-you-complete-the-first-fou... 

[whodiini]

Thanks.  I read your link and the link that was included in the link and come away with the conclusion that there is confusion. If I take what the IRS says literally instead of interpreting what they said, I would say that the first year postgraduate qualifies for AOTC because US Code 25A(2)(C) "The American Opportunity Tax Credit under subsection (a)(1) shall not be allowed for a taxable year with respect to the qualified tuition and related expenses of an eligible student if the student has completed (before the beginning of such taxable year) the first 4 years of postsecondary education at an eligible educational institution.”  It says nothing in the actual code about a degree in terms of eligibility and in fact allows in an example, in the IRS explanations of the form, funds to be used in a graduate program if it is within the 4 years.  So it is clearly tied to 4 years at an eligible educational institution. Everything else is conjecture unless supported by tax court rulings.  I searched and did not find any tax court cases where the IRS challenged the use of AOTC for graduate school expenses when all eligibility requirements were met.  

So I will apply the AOTC to the first year of expenses and LLC to the other years. 

[whodiini]

According to IRS p970 instructions,

1. Completion of first 4 years. A student has completed the first 4 years of postsecondary education if the institution at which the student is enrolled awards the student 4 years of academic credit at that institution for coursework completed by the student before 2023. This student generally wouldn't be an eligible student for purposes of the American opportunity credit."

So if attending a qualified institution in the UK, the student is awarded 3 years of academic credit to get a degree.  And the exception hasnt occurred, so it would therefore allow the first year of postgraduate schooling to be eligible for the AOTC.

Sounds like this is a situation that they did not consider writing the rules; I would think if they decided to Audit that the IRS would lose.

[DawnC]

If you had a 4yr undergraduate degree (or the equivalent) as of 12/31/2022 - you would not qualify for the credit in 2023.   @whodiini 

[whodiini]

I have read all the tax code and IRS instructions and it seems that if you have a 3 year undergraduate degree you qualify for 1 more year. After all, if you get an associates degree from a community college in 2 years, you qualify for another 2.

[Vanessa A]

You are correct.  If you have a 3 year undergraduate degree, you have one more year left to take the AOTC.  

[RobZ2]

The IRS website mentions degree several times, "Be pursuing a degree or other recognized education credential", so my guess is the first 4 years pertains to a 4-year degree. However, the IRS's website says this: "Academic Period can be semesters, trimesters, quarters or any other period of study such as a summer school session. The schools determine the 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."

So my guess is, if you finished a 4-year degree before 4 years, it still counts as 4 years. I went to a College that had only 2 terms. Each were 6 months long, but I could finish as many courses as possible, and earn as many credits as I wanted to. If I finish the degree in 2 years, I probably would not qualify for the AOTC. The IRS's website often refers to the AOTC for undergraduates also. So, to clear things up with others that have questions, you can only assume that any student that has a 1098-T, has not graduated (4-year degree), and attended college at least half time, qualifies for the credit.