z-thalji
New Member

Can I claim the AOC while using GI Bill?

Can I claim the american opportunity credit?? I go full-time to college and the Gi Bill (post 9-11) pays for my tuition in full. Plus, I get a kick-back from the pell-grant every semester. I also feel like at my last college I was able to claim that and received a 1098-T but I don't receive one from this college.

Education

While you can claim the AOC while using the GI Bill, you must reduce the amount of qualifying educational expenses by any amounts of tax-free veterans assistance you have received (see example below).  So, in your case, you would have no tuition expenses to use to claim the AOC, but you may be able to claim some AOC based on other expenses such as required books and fees.  

When you go through the education section of TurboTax, the program will ask you all the appropriate questions.  Be sure to include all of your information because it's also possible that you may have taxable income from a Pell Grant refund.  See more information on that topic here.  You should receive a 1098-T (it may not have been produced yet by your college) but, in some cases, where scholarships and grants exceed tuition and fees, the college may not produce one.  In this case, you can use your records.

Here's an example from Publication 970 -

Example. You have returned to college and are receiving two education benefits under the latest GI Bill: (1) a $1,534 monthly basic housing allowance (BHA) that is directly deposited to your checking account, and (2) $3,840 paid directly to your college for tuition. Neither of these benefits is taxable and you don't report them on your tax return. You also want to claim an American opportunity credit on your return. Your total tuition charges are $5,000. To figure the amount of credit, you must first subtract the $3,840 from your qualified education expenses because this payment under the GI Bill was required to be used for education expenses. You don't subtract any amount of the BHA because it was paid to you and its use wasn't restricted.

https://www.irs.gov/pub/irs-pdf/p970.pdf (see page 12-13 for more detail on this matter)

Carl
Level 15

Education

Basically, if all of your *qualified* education expenses (tuition, books, lab fees) are covered by scholarships, grants, and it your case the GI BIll, then you have no out of pocket *qualified* expenses. Therefore, you would not qualify for the AOC.

Education

Carl, Your summary makes better sense.  Thank you!

Education

If I am enrolled in a college that uses Web-Enhanced Courses so I would need a computer to do part of my work while in class and take online courses as well, would I be able to use the AOC for expenses related to purchasing a computer to get my classwork done?