Dear TT Experts,
I have a quick question regarding the American Opportunity Credit (AOC)
My youngest son is 19 years old. Going through his College sophomore year as we speak. Hasn't claimed educations credits in prior years. My wife and I have claimed him as dependent in prior years. We have not included education credits either.
Checked the requirements for AOC and he complies with all but the earning more than half of his support.
He had salary wages in 2024 of $1,250 or so. He received a form 1098-T which shows $10,493.98 in Box 1; and $ 5,875 in Box 5 for scholarships or grants. He also has an unsubsidized loan ($5K/year) that he doesn't have to start paying until after graduation, but we pay around $70/month to this loan to control interest growth.
If my wife and I claimed him as dependent, we won't get any education credits as we have surpassed the income limit. Claiming him as dependent gives us $500.
If we don't claim him as dependent, and he files showing that another taxpayer won't claim him in 2024, Turbo Tax is providing a $ 1,000 AOC credit whether we answer No - his earned income provided less than half of his support, or Yes - he provided over half of his support with earned income. So, the $ 1K credit stays whether we select one or the other. Of course, the option to be selected should be: "No, my earned income provided less than half of my support".
I am a bit confused as I thought that answering - No, my earned income provided less than half of my support, would disqualify him for the AOC credit, but TT is increasing his Federal Refund regardless.
Also, if we don't claim him as dependent this year, can we go back and include him as dependent next year? Or once you go into one direction, there is no way back?
Thanks in advance for your clarification & support,
OZX
