Can my son amend his 2015 return and repay the $1,000 refund he received for the American Opportunity Credit, and instead take the Lifetime Learning Credit?

[user81121]

The American Opportunity Credit was claimed by my son in 2014 and 2015, and by us, his parents, in 2010 and 2011.  My son will qualify as our dependent for 2017 and we would be eligible for the full $2,500 American Opportunity Credit if he can amend his 2015 return and not take the American Opportunity Credit for the fourth tax year in 2015.  He received a $1,000 refund for his 2015 return in 2016 which we understand would have to be repaid with interest and penalties with the amended return.  He will not complete his 4-year degree at a qualified University until mid-2018.  He would also choose not to claim the American Opportunity Credit on his 2016 return so that we could claim it for 2017.  Can he amend his 2015 return and not take the American Opportunity Credit so that the fourth year can be claimed in 2017 instead?

[mattrosarioabm]

How can I do that I need to amend to

[MiriamF · Accepted solution]

Yes, your son can amend his 2015 return to eliminate the claim for an education credit. But he can only claim the American Opportunity Credit (AOC) for four years. If he (and you) have already claimed it for three years after the amendment, then you can only claim it for one more year. You would have to amend two of the past returns in order to take it on two future returns.

There are other education credits for which you may be qualified. Neither is as good as the AOC in terms of the maximum refund, and no other education credit is refundable (gives you a refund even if you don't owe tax). If your son is your dependent, you should look at those credits before amending more returns. The Lifetime Learning credit, for instance, has a maximum refund of $2,000.

All education credits have income and refund limitations. TurboTax will calculate which is the best for you. Try typing in different scenarios to see which gives the best result.

More information about education credits can be found in the IRS Tax Benefits for Education information center.

[user81121]

We only need to amend one return to take the $2,500 AOC for 2017.  The Lifetime Learning Credit will be used in 2015 and 2016 so that the 4th AOC will be taken in 2017 which will provide the best result.  Thank you for confirming that we can amend 2015 and repay the $1,000 refund received for 2015.

[alisonbr]

How much will it cost in fees and penalties to repay a $1000 refund? I have a similar case.

[maglib]

<a rel="nofollow" target="_blank" href="https://www.irscalculators.com/irs-penalty-calculator">https://www.irscalculators.com/irs-penalty-ca...> Here is a IRS interest and penalty calculator.  TT will also do this for you or you can allow the IRS to calculate.

If you owe the IRS a balance, the penalty is calculated as 0.5% of the amount you owe for each month (or partial month) you're late, up to a maximum of 25%.

Interest is computed on a daily basis, so each day you are late paying your taxes, you'll owe 0.0082% of the balance.

So, if you owe the IRS $1,000 and you're 90 days late, first calculate your daily interest charge, which would be about $0.082. Then, multiply it by 90 days to arrive at the total interest charge of $7.40.