topic Having a similar problem this year, I qualify and am clai... in Education

Turbo tax is telling me I don't get the American Opportunity credit but I am only in my 4th year of college and I was under the impression I should get it

cherocketmom — Wed, 05 Jun 2019 02:50:52 GMT

Without having the ability to access your information, I...

Phillip1 — Wed, 05 Jun 2019 02:50:53 GMT

Without having the ability to access your information, I can think of a couple of common reasons why you may, unexpectedly, not qualify for the American Opportunity Tax Credit.

One of the biggest issues for many students, is that their parents are claiming them as dependents. Under IRS rules, the American Opportunity Tax Credit is attached to the student’s exemption. If you are filing for yourself, you can claim the exemption - otherwise you cannot claim the credit. Technically, parents or guardians are often able to claim student children until they are the age of 24 years old if the student is unmarried. If this is the case, and you marked that "someone else can claim me as a dependent" TurboTax will show that you do not qualify for the tax credit. I recommend reviewing these rules (Pub 501 regarding Dependents) to make sure whether you or your parents can claim your tax exemption.

Another issue that commonly prevents students from claiming the credit is that they have received more money in scholarships and grants (listed on the form 1098-T from your school) than qualified education expenses (including expenses listed on this IRS site and tuition and fees listed on the form 1098-T from your school). Make sure you have included other education expenses like books,supplies and equipment in the expenses that you have included in TurboTax.

If you are now in graduate school, that may be another reason that you are not qualifying for the credit.

Here is a full list of all qualifications for the American Opportunity Credit. If the above paragraphs do not describe your situation, you may not qualify because of any of these other items:

The student must be you, your spouse, or a child whom you claim as a dependent on your tax return.
The credit can only be claimed for the first four years of post-secondary education.
The student must be pursuing a degree, certificate, or other recognized credential at an Eligible Educational Institution.
The credit is only available for four tax years.
The student must be enrolled at least half-time for a minimum of one academic period during the tax year.
The academic period must begin either during 2016 or during the first three months of 2017.
You must pay the expenses during 2016 or during the first three months of 2014.
You can pay expenses with a loan, including low-interest student and government subsidized loans, but be sure to deduct the expenses rather than the loan payments.

Qualified education expenses include tuition and "course materials." For this purpose, the term "course materials" means books, supplies, and equipment needed for a course of study whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance.

Courses must be taken at an eligible educational institution. Check with your school to see if they are eligible to participate in a student aid program administered by the Department of Education.
You can't claim the credit if you are claimed as a dependent on your parent's (or someone else's return). This credit is attached to the student's exemption. If you are filing for yourself, you can claim the credit - otherwise you can not.
You cannot claim the credit if you are filing using the married filing separate filing status.
Your Modified AGI (income) should be under 90,000 dollars, or under 180,000 dollars if you are filing as married filing jointly.

i met all and still tells me I don't qualify

mckeonfam — Wed, 05 Jun 2019 02:50:55 GMT

i met all and still tells me I don't qualify

are you claiming yourself or is your parents claiming you...

maglib — Wed, 05 Jun 2019 02:50:56 GMT

are you claiming yourself or is your parents claiming you? Only the person claiming the student benefit from the education credits. Did you enter all your expenses for college? Did you have a 1099Q possibly? As @TurboTaxPhillip said, we can not see your return so you would have to post details as to who is claiming you, the amounts you had as education expenses, scholarships, 1099-Q's and your income for us to help you further.

claiming myself - no 1099q

ryan1redsox — Wed, 05 Jun 2019 02:50:57 GMT

claiming myself - no 1099q

you may want to go bath through the personal info section...

maglib — Wed, 05 Jun 2019 02:50:59 GMT

you may want to go bath through the personal info section. There is a question on if you provided over half your support from earned income, the questions on can anyone else claim you.. Also go back through 1098-t interview and ensure you said you were attending school at least half time..

Having a similar problem this year, I qualify and am clai...

neblood97531 — Wed, 05 Jun 2019 02:51:02 GMT

Having a similar problem this year, I qualify and am claiming myself. I supported myself this year and my mother didn't claim me. Confused as to why I am not qualifying.

@TurboTaxPhillip

neblood97531 — Wed, 05 Jun 2019 02:51:04 GMT

@TurboTaxPhillip

There is a bug in the logic. I met all the qualification...

info28 — Wed, 05 Jun 2019 02:51:07 GMT

There is a bug in the logic. I met all the qualifications for the American Opportunity Credit, yet Turbotax said that I didn't qualify for this credit. One of the items to qualify for the American Opportunity Credit is that you need to be at least Half time Student.

One of the questions in TurboTax is: Where you at lest half time student? The the options are 1) Full Time 2) Half Time and 3) Less than half time.

Being a full time student, I selected option 1) full time; and TurboTax told me I didn't qualify for the credit. I reviewed my answer to 2) Half Time and TurboTax told me that I did qualify.

Since Full time student is more than Half time and the requirement is to be at least half time; both answers, Half time and Full time should qualify for this credit (assuming that the other requirements are met).

Turbo tax needs to change their system for the american o...

wildbeest55 — Wed, 05 Jun 2019 02:51:08 GMT

Turbo tax needs to change their system for the american opportunity credit. I selected full time student and it told me I didn't qualify. I went back and selected half time and now I do.

Tried that, still not working on my end.

neblood97531 — Wed, 05 Jun 2019 02:51:09 GMT

Tried that, still not working on my end.

Change the number of years you use this credit to 1 year...

pmoustakas — Wed, 05 Jun 2019 02:51:10 GMT

Change the number of years you use this credit to 1 year and then it works. There is a bug and I spent 6 hours to fix it. really bad product and expensive.

Re: Turbo tax is telling me I don't get the American Opportunity credit but I am only in my 4th year of college and I was under the impression I should get it

ChrisA75 — Fri, 21 Feb 2020 01:56:11 GMT

Where do I add additional qualified expenses. TurboTax is telling me I can only include the amount from box 1 of the 1098-T, but I have additional costs for books and computer. Where do I put those? There's also this https://turbotax.intuit.com/tax-tips/college-and-education/deduction-for-higher-education/L0krerdUK

there seems to be an error, as it claims you cannot deduct books and equipment unless it's paid directly to the university.

Help!

Re: Turbo tax is telling me I don't get the American Opportunity credit but I am only in my 4th y...

AnnetteB6 — Sun, 23 Feb 2020 13:17:00 GMT

To enter your other education expenses and your Form 1098-T, use the following steps shown below. Go all the way through the section until you have entered your Form 1098-T and then you can select the different categories of education expenses to enter your additional qualified expenses.

Also, the article you referenced is discussing the Tuition and Fees Deduction, not the American Opportunity Tax Credit or the Lifetime Learning Credit. They each have their own requirements for qualified expenses, including requiring books be purchased through the school in some cases. After you have entered all of your information, TurboTax will determine which education tax benefit is best for your situation.

Start by going to the Education section of your return using these steps:

On the top row of the TurboTax online screen, click on Search (or for CD/downloaded TurboTax locate the search box in the upper right corner)
This opens a box where you can type in “education” (be sure to enter exactly as shown here) and click the magnifying glass (or for CD/downloaded TurboTax, click Find)
The search results will give you an option to “Jump to education”
Click on the blue “Jump to education” link

Then, if you are not prompted to enter your 1098-T, go through the entire education expenses section (without entering any information yet) of your return until you reach the screen titled “Your Education Expenses Summary”, then follow these steps:

Click Edit next to the student name.
On the screen titled “Here’s your Education Summary”, click Edit beside Tuition.
Enter the information from your Form 1098-T.

@ChrisA75

Re: you may want to go bath through the personal info section...

droodhall — Thu, 17 Feb 2022 15:35:03 GMT

I believe Turbotax gave $1,000 American Opportunity Credit because the 22 y/o full time student had $8,900 in Earned Income and was filing single with no one else claiming him as dependent. So, the $8,900 in income must be considered more than half of his total support. My question: how does Turbotax determine what this student's total support is??

Re: you may want to go bath through the personal info section...

ThomasM125 — Thu, 17 Feb 2022 20:37:55 GMT

@droodhall TurboTax does not know what your total support is, but you are asked when you fill out the personal information in TurboTax if anyone else can claim you as a dependent on their tax return, which would mean that you do not provide over half of your support if someone else can claim you.

Re: you may want to go bath through the personal info section...

ThomasM125 — Thu, 17 Feb 2022 20:38:11 GMT

Re: There is a bug in the logic. I met all the qualification...

Rembrandt — Sun, 28 Aug 2022 01:25:34 GMT

@info28 @wildbeest55 Thank you SO MUCH for posting "There is a bug in the logic" and "Turbo tax needs to change their system for the american opportunity credit.", highlighting that it is a software issue, not a tax issue.

I've been going round and round on this trying to figure out which of the "four" options shown by Turbo Tax for why I don't qualify is causing the problem, since I clearly qualified for all of those situations. So, taking your "5th option for disqualification" discovery, that a full-time student does NOT qualify but a half-time student does, I went back to my profile and changing from "full-time" to "at least half-time" and that made the difference.

The most shocking part of this flaw is that IN THREE YEARS IT STILL HASN'T BEEN FIXED. It's August 2022 (compared to your 2019 post), filing for tax year 2021. This flaw in not getting the credit for which I strongly felt I was eligible is the SOLE reason I filed an extension. I wonder how many people just filed without getting the credit - as I was so close to doing to just be done with it! But thankfully decided to put more time into it.

Re: There is a bug in the logic. I met all the qualification...

NCperson — Sun, 28 Aug 2022 18:03:34 GMT

@Rembrandt - I am intrigued that this may be a bug.... as AOTC can get quite confusing

if you are a dependent of someone else (normally that would be your parents), one of the criteria for AOTC is being 'at least a half time student' and that can be found on Form 1098-T in Box 8. The person who you are a dependent of (normally your parents) would claim AOTC - not you. That is the way AOTC works if you are claimed by someone else.

But the criteria is different if YOU, the student, are claiming AOTC and you are under 24 years old and not claimed by someone else. The eligibility bar is much higher

you are NOT eligible for the 'refundable credit' portion of AOTC (which is up to $1000) if

1) one of these three apply

a) you are under the age of 18
b) age 18 at the end of the year and your earned income was less than 1/2 of your support
c) a full time student over 18 and under 24 and your earned income was less than 1/2 of your support (a full time student is defined as being in college during any part of 5 calendar months in 2021)

AND

2) at least one parent is alive

AND

3) you are not filing Married - Filing Joint

if you meet all three criteria you are NOT eligible for the up to $1,000 refundable credit; however, you are still eligible for the up to $2500 non-refundable credit (but that requires earning more than the standard deduction to be eligible for the 1st dollar of tax credit of the $1500 - a different story if you want a fuller explanaton. )

So I am curious

1) how old were you on 12/31/21?

2) are you being claimed by anyone else? yes or no?

3) were you in college for any 5 calendar months (which is the definition of a full time student) in 2021?

4) Is Box 8 checked on Form 1098-T?

5) what is your filing status?

6) was your earned income less than 1/2 your support? (this is hard to say "no" to unless you had a large income to cover 1/2 your expenses, including college expenses without consideration of scholarship money)

7) is at least one of your parents alive?

There are plenty of cases where parents are high wage earners and not eligible for AOTC. But the IRS was too smart and came up with criteria to make sure their children who may file their own tax return were ineligible as well (at least inelgible for the refundable $1000).

So i don't see the bug. What I see may be a misunderstanding of what constitutes a 'full time' student. If you are one you have to answer yes, you can't intentionally answer 'no' just to get the refundable credit - that would be lying to the IRS to get money someone was not eligible for; some may use a stronger word: 'fraud'.

@Hal_Al- as the Community expert on these AOTC matters, can you please review this? I think it's a misunderstand of how AOTC works and not a TT bug. Your response is much valued and appreciated.

Re: There is a bug in the logic. I met all the qualification...

Hal_Al — Sun, 28 Aug 2022 16:26:54 GMT

@Rembrandt There is no bug. That's the rules: a half time+, non-dependent, student qualifes for the refundable portion of the AOTC but some full time students do not.

A full time, unmarried student, under age 24, even if you don't qualify as a dependent, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working, or is an orphan. You cannot be supporting yourself on parental support, 529 plans or student loans & grants. It is usually best if the parent claims that credit.

From the Pubs and form 8863 instructions: He does not qualify for the (up to) $1,000 refundable portion of the American Opportunity Credit if items 1, 2, and 3 below apply to him.

1. He was:
.....a. Under age 18 at the end of 2021, or
......b. Age 18 at the end of 2021 and his earned income was less than one-half of his support, or
......c. A full-time student over age 18 and under age 24 at the end of 2021 and his earned income was less than one-half of his support .2. At least one of his parents was alive at the end of 2021.
3. He is not filing a joint return with his spouse for 2021.

When you indicate that you are a full time student, under 24, in the personal info section, Turbotax (TT) will generate the earned income and living parent questions , in the personal info interview.

Why are the rules that way? As @NCperson said, It's to keep ineligible high income parents from switching the refundable credit to the student. Note the similarity to the kiddie tax rules. If the student (even full time) has a tax liability, he is allowed to claim the non refundable AOTC. In that case, the refundable portion becomes non-refundable. That is, if the student has a least a $2500 tax liability, he gets the full $2500 AOTC. The parent must forgo claiming the student as a dependent (and the $500 other dependent credit).

Yep, it's complicated. TT can handle it, but you have to read and answer the interview questions carefully.