Can I take the American Opportunity credit now if I paid for tuition in Dec 2016 but the school received it in Jan 2017 for my first semester beginning in Jan 2017?

[wwiley15]

I began my first semester of college in January 2017.  I paid for it out of a 529 account in December of 2016.  The college did not receive it until January 2017.  I received a 1099-Q for the payment but will not receive a 1098t for 2016 because I was not a student then.  I need to enter the 1099-Q now and turbo tax is giving me a $1000 American Opportunity Credit.  Can I take this credit even though I was not a student in 2016?

[MiriamF · Accepted solution]

The 1098-T is a form for information only. The amounts that you report on your tax return are not necessarily those that are on the 1098-T.

If your payment was more than the 529, then you could report tuition of exactly the amount of the 529 or the full amount you paid, and record the amount of the tuition payment on your 2016 tax return. But you must remember that you took credit for spring semester expenses in 2016 and subtract that amount from your 2017 1098-T tuition.

Students often forget to track their expenses for books and required supplies. Save your receipts!

Are you a dependent on your parents' tax return? If so, they will claim the education credit. You can claim it only if you are not a dependent.

Remember that you only have four years to claim the American Opportunity Credit, and the amount paid by your 529 plan will not count. Since for most people, their education spans at least 5 tax years, you should consider whether this is the best year. Only you can answer that question.

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