American Opportunity Tax credit for highschooler

[hml9495]

My son is in senior high school, will graduate 2025. In 2024 we paid $450 to transfer 2 AP courses into 6 college credits toward his bachelor degree. We also paid $500 admission deposit to the college in Dec 2024. He received 1098-T for 2024 from the college with a mark “at least half time” for $450. Question, should we claim AOTC on our tax 2024 for $450, or $950, or $0? We expect our AGI will be $180K+ by his 2nd or 3rd year of college.

[KrisD15]

The 500 admission fee paid in 2024 could only be claimed if he started classes at the college in the first three months of 2025. 

[hml9495]

Thank you! Will IRS likely flag  us if we claim AOTC for highschooler despite we received 1098-T from college for 2024 tax year (with check marked at least half  time)? And ban us from claiming AOTC for 2 years? To be safe, should or can we wait to claim 2024 1098-T wiith 2025 tax year?

Thanks so much in advance!

[Vanessa A]

If your son does not graduate from high school until 2025, and did not start classes in the first 3 months of 2025, then you would not be able to claim the  credit.

Also, the American Opportunity Tax credit is only good for the first 4 years of school.  So, claiming the credit now when your expenses are $500, would cause you to lose out on a higher credit amount in future years.  The credit is worth up to $2,500, if you are only claiming expenses of $500 you would only get a $500 credit, for the first year as opposed to waiting until he has tuition expenses and you could potentially get a credit of $2,500.  Meaning, you would potentially lose $2,000 in credit if you claimed it for just the $500. 

[Hal_Al · Accepted solution]

Interesting scenario!  The usual answer is don't waste one of your four times on so little money.  But, in your case you may never see the four times.  Students are not eligible for the refundable portion of the AOTC, on their own return.  But if he has enough income, he may still be able to use them in the future. 

The 2nd thing is High school students are not usually eligible for the more generous American Opportunity Credit, unless they are officially enrolled as a degree candidate.  Does what you describe count as officially enrolled? It probably doesn't matter.  Money paid in 2024 is only qualified if it is for the first term (starting in Jan-Mar) of 2025.  I don't think you meet that requirement. 

Q. Should we claim AOTC on our tax 2024 for $450, or $950, or $0?

A. $0. 

Q. Can we wait to claim 2024 1098-T with 2025 tax year?

A.  No. Expenses can only be claimed in the year paid.