Q. Can I get AOTC credit if my school provides a 1098-T form?
A. Probably not. There's a new urban myth among college students that says they can get a $1000 from the government just for filing a tax form. They see a 1098-T, in hand, as Willy Wonka's Golden Ticket to a government handout. For most of them, they simply aren't eligible. A full time unmarried student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working. You cannot be supporting yourself on parental support, 529 plans or student loans & grants. . It is usually best if the parent claims that credit.
You cannot claim a credit if you are, or can be, claimed as a dependent by someone else.
Q. What if my school is paid off full due to grants/scholarships/loans and I didn't pay out of pocket could I still get this credit?
A. Yes, if you are otherwise eligible. In particular, tuition paid by loans, is counted the same as paid out of pocket. Furthermore, in many cases, the student can treat scholarships as taxable income, allowing the parents (or himself, if eligible) to claim the credit. See example below.
Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.
What if my school is paid off full due to grants/scholarships/loans and I didn't pay out of pocket could I still get this credit?
