American Opportunity Credit

[mdktech]

Using Example 4 in Pub 970, my son’s case is very similar to Larry’s case except that the community college that he attends is on a quarter system. During 2022 spring and fall quarters, my son attended College X but not as part of a degree program. He graduate from High School in October 2022. For the winter 2023 quarter (January to March 2023), he enrolled as a full-time student at college X as part of a degree program, and College X awarded him credits for the prior coursework at College X. Is my son an eligible student for all of tax year 2022 and that the qualified expenses paid for classes taken at College X during the spring and fall 2022 quarters may be taken into account in figuring any American Opportunity Credit? He has received a 1098-T for 2022 tax years from College X. He also received 1098-T for 2021 but I didn’t claim any AOC credits.

[Cynthiad66]

Actually, the form 1098T answers all of those questions in Box 7.  If you enter the form 1098T accurately, the credit should be accurately applied.

• You can only claim the credit for a year during which the student carries at least a half-time course load for a minimum of one semester beginning in that year.
• Additionally, the student must be enrolled in a program that leads to an associates or bachelors degree or some other recognized credential.

Since he just graduated from High School, he will have ample opportunity to take the credit for 4 years.  I would wait to use the credit until he is pursuing a degree where the expenses may be more therefore the credit will be larger.  Remember, you can only take that credit for 4 years.

However, if you know that he will receive scholarships and grants for his 4 year degree program, he may not qualify for the AOTC at all.  

Use this link for additional information

@mdktech

[mdktech]

Because he has already sufficient college credits, he will be transferring to an university as the 2nd/3rd year college student, hence, we would like to claim the AOC starting the year 2022. I just want to make sure that we are allowed to include the tuition and the cost of books from all quarters (spring, fall and winter). Thank you for your prompt reply.

[DaveF1006 · Accepted solution]

Yes, you will be able to claim the cost of books as well as the tuition expense for the full year.

[mdktech]

Sorry that I was not clear in my previous question. May I claim the cost of tuition and books for spring 2022, fall 2022 and winter 2023 quarters (since he was enrolled as a full-time college student as part of a degree program in Oct 2022)?

[mdktech]

Thank you. I just saw your reply.

[DaveF1006]

If you receive a 1098T for 2022, you will report that in your tax return and take a credit based on the information from that 1098T.  You can also claim the cost of books paid for the Spring 2022, Fall 2022, and winter 2023 quarters if paid in 2022. Also you can claim tuition for the 2023 quarter if this not included in 2022 1098T.  

You may read this IRS publication to verify you can claim educational expenses paid in 2022, for tuition or other expenses that occur in the first three months of a 2023 academic year.

@mdktech 

[Hal_Al]

I'm of the opinion that the tuition paid for the spring and fall 2022 quarters may not be taken into account in figuring the American Opportunity Credit, because he was not enrolled as a degree candidate at the time the courses were taken.  

If the tuition, for the  winter 2023 quarter (January to March 2023), was paid in 2022, it may be counted for the AOC. 

[Cynthiad66]

If he was full time student working towards a degree then absolutely.  Use the form 1098T plus any additional expenses that he may have incurred.

@mdktech