I have an AA degree, but I have also attended a community college for over 6 years (mostly taking electives and theater classes and not working towards a degree.) Does this count as 4 years of college credit?
If you are working toward a four-year degree, you will meet the part of the definition of an eligible student defined as “has not completed the first four years of post-secondary education as of the beginning of the taxable year”. The fact that you have taken more than 4 years working toward the degree is not what is being measured. The fact that you have not completed it yet is what is being measured.
However, it is important to keep in mind that you can only take the American Opportunity Credit for 4 years. If you have taken the credit 4 times, you are no longer eligible even if you have not earned a four year degree in that time.
What if I had already completed a bachelor's degree and was working on a second one during the year I'm reporting on?
If I completed my bachelor's degree in 3 academic years (2013-16) could I have claimed the American Opportunity Credit for 2018 during my first year of grad school? I'm confused if I had completed four years of post secondary education or not as the definition is vague on the IRS site. The AOC was claimed for me in 2014, 2015, and 2016, so if I have one more year of eligibility I would like to amend my 2018 return to claim it as that would significantly increase my refund.
No. You may claim it up to four times, but if the degree was earned before Jan 1, that student is no longer eligible to claim the American Opportunity Tax Credit.
Thank you Kris. How do you know that? Is the four years of college credit synonymous with a bachelors degree, regardless of the years it took to complete? Can't seem to find clarity on the IRS site as they just speak of years of education, not degrees. https://www.irs.gov/credits-deductions/individuals/education-credits-questions-and-answers
Q9 seems to muddy it more.
Q9 in your link states that as long as January 1 of that school year, the student had not received a degree, then all classes count towards AOTC. The AOTC is only allowed 4 times. The IRS based that on an average of 4 years for an undergraduate degree. The lifetime learning kicks in after that.
Related:
Who is eligible to take the American Opportunity Tax Credit?
Well, it doesn't mention a "degree", only refers to four years of post-secondary education as of the beginning of the year... as of the beginning of 2018 I had only completed 3 years of post secondary education.
But I think you and kris are probably right.
The actual instructions for the Education Credit, on page 2, does clearly state first four years of post-secondary education. To me, that implies any degree within the first 4 years. Instructions for Form 8863 (PDF) (HTML) Best wishes!
So if it was my fifth year in college at the beginning of 2019, but had only applied for the AOTC 3 times prior, I do not qualfiy?
Yes, as long as you hadn't finished the program prior.
Don't think calendar years, think Freshman, Sophomore, Junior, Senior.
If you had not earned a bachelor's by 01-01-2019 you were not past the first four years of a degree.
It doesn't matter how many years it takes for you to get to that point.
The credit is still available if you,or anyone claiming you (such as your parents) did not claim the credit 4 times already (combined)
The IRS works in calendar years, while colleges work in academic years. So the reality is, it takes you five calendar years to get that four year degree.
You can only claim the AOTC four times. That's it. The AOTC is only available to an undergraduate. If you already have a four year degree in a specific field of study, then you are no longer an undergraduate.
If you are working on another degree in another field of study, then while you may be an undergraduate in that field, if you already claimed the AOTC four times, you can't claim it again. Not ever for so long as you may live.
Just to confirm, so if I was already at Senior Credits (120) at 1/1/18, then I was still considered a senior at 1/1/19 (150 credits at this point...engineering), but no bachelors degree (Still undegrad), then when it asks the question if I completed the first 4 years of post-secondary education before 2019, I would still say no?
I completed my Bachelor’s Degree and my first Master’s Degree more than 10 years ago, in a different country, while I had a different citizenship.
I now have dual citizenship and I started an Accounting graduate program in the US in 2021. Since I never claimed the American Opportunity Credit, am I eligible for it now, even though I am a graduate student?
You would not be eligible for the American Opportunity Tax Credit because you completed the first four years of post-secondary (education after high school) at the beginning of the tax year.
You may be eligible for the Lifetime Learning Credit.
To be eligible for LLC, the student must:
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?
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
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).
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.
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
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.
According to IRS p970 instructions,
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.
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