topic Clarification Regarding the 4-Year Rule to Qualify for the American Opportunity Credit in Deductions & credits

Clarification Regarding the 4-Year Rule to Qualify for the American Opportunity Credit

pm17 — Wed, 10 Mar 2021 13:14:54 GMT

Hello! I need some help understanding the 4-year rule regarding the American Opportunity Credit. Long story short, I began attending a 4-year university at 18, but I was far too immature, short-sighted, and careless at the time, so I failed out after a year. Then I attended community colleges on and off from 19-24. Finally, at 24, reality hit me, and I began taking my life and future seriously, especially after transferring back to the same 4-year university to pursue a degree in accounting.

I earned many credits from various community colleges and unnecessary classes throughout the years, but I don't have a BA yet. After the current semester, I have just two courses left until I earn my accounting degree (120 units for the degree), but in total, I will have more than 120 units upon earning my degree due to the random classes that I took in prior years. Despite my choice of major and extensive research, I still don't feel confident in concluding that I am eligible for the AOTC. Box 8 is checked on my school's Form 1098-T, and box 9 is not. Additionally, the AOTC was not claimed by my parents or me in the past, so I think I qualify, but I am not sure as the IRS guidelines are somewhat unclear.

Thank you in advance for your help, and I look forward to learning from your expertise!

Re: Clarification Regarding the 4-Year Rule to Qualify for the American Opportunity Credit

DanaB27 — Wed, 10 Mar 2021 13:52:40 GMT

Yes, if you did not claim the AOTC in any previous 4 calendar years then you are able to claim the AOTC if all other requirement are met.

An eligible student is defined as a student who:

Is enrolled at least half-time in a program leading to a degree, certificate, or other recognized credential. (Yes)
Had at least one academic period beginning during the year. (Yes)
Didn't claim the American Opportunity Tax Credit for more than three previous years. (Yes)
Didn't complete the first four years of post-secondary education before the beginning of the year. (Yes)

From your description you meet all of these requirements.

Please see Who is eligible to take the American Opportunity Tax Credit? for more details.

Re: Clarification Regarding the 4-Year Rule to Qualify for the American Opportunity Credit

Hal_Al — Wed, 10 Mar 2021 13:59:16 GMT

For that rule, you have not completed 4 years of post secondary education. Even though you have more than 120 credits, you don't have 120 "that count" for completion of the 4 year requirement.

Be advised, that's an interpretation. You won't find that in the IRS pubs. On the other hand, you won't find a better explanation, either.

Re: Clarification Regarding the 4-Year Rule to Qualify for the American Opportunity Credit

Opus 17 — Wed, 10 Mar 2021 15:02:42 GMT

If you attended school more than half-time for 4 years, you are no longer eligible, even if you did not get a degree. You could have claimed it in those years.

If you received degrees or credits equivalent to 4 years of college (a bachelors or 2 associates) then you are no longer eligible, even if you got the degree or credit from part-time study instead of 4 years of traditional full time schooling.

If you don't have 4 years of credit equivalents, and haven't attended more than half time in 4 prior years, you are eligible now.