Is a graduate student who graduated from undergrad a year early eligible for the American Opportunity Tax Credit during their first year of grad school?

worfsduytue · ‎June 4, 2019

I know that the typical answer to "Can a graduate student use the American Opportunity Tax Credit?" is no, because typically a college student spends 4 years getting their undergraduate (i.e. Bachelor's) degree. For the AOTC (from publication 970 from the IRS):

"As of the beginning of 2017, the student had not completed the first 4 years of postsecondary education (generally, the freshman through senior years of college), as determined by the eligible educational institution. For this purpose, don't include academic credit awarded solely because of the student's performance on proficiency examinations."

In my situation, I graduated with my bachelor's degree in 3 years (due to getting a lot of AP credits during high school). Then I went directly to graduate school. So, technically, that first year of graduate school was my 4th year of "postsecondary education". I should note that neither the AOTC nor the Hope credit has ever been claimed by or for me.

From directly reading the information from the IRS, it seems like I should be able to claim the AOTC despite having already graduated with a Bachelor's degree. Is this possible? It would significantly relieve my tax burden when compared to the Lifetime Learning Credit.

KrisD · ‎June 4, 2019

If you earned your bachelor's in 2017, your education expenses can be used for the American Opportunity Tax Credit. If you earned it before 2017, the credit is no longer available to you. It's either- up to four times or until you earn your bachelor's degree.

CLICK HERE for IRS Pub 970 Education Credits

AWM · ‎February 10, 2020

KrisD. Would you please point out where in Pub 970 that it specifically states that the AOC can't be used after obtaining a Bachelor's degree. If there is a student that obtains a bachelor's degree in two years due to taking AP classes in high school. My understanding is that AOC applies to first 4 years of post secondary education, with no bachelor stipulation.

MayaD · ‎February 10, 2020

Generally, graduate students -- or those claiming them as a dependent -- won't be able to claim the American opportunity credit but will still be eligible for the tuition and fees deduction and the lifetime learning credit.

Please refer to Q12 in the link regarding the Eligible student

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