Am Opp Now - Tuition and Fees prior

[dktax]

They have been using the tuition and fees form 8917 (4 years worth) until now due to AGI. Student has now switched to technical college but has not yet attained a 4 year degree. Is he now eligible for the American opportunity credit?

[erchess]

My Two Cents

I don't think graduation or failing courses counts. I think you go ok, this school considers 20 semester hours a full time load so the student is done using Am Op Credit after passing 8 semesters or 160 semester hours. I do think credits earned in years when the student did not claim the Am Op Credit for whatever reason still count toward the total. Note that credits obtained by passing proficiency exams do not count. Therefore it would be possible for a student to complete 8 semesters credit while still considered to have Am Op Credit years left for further studies. On the other hand if the student reaches the magic number of credits (160 in this example) in say three years he or she is also done using the Am Op Credit.

I base these conclusions on reading of this year's 1040 Edition Tab 3 and not on any other reading. I am open to being corrected based on I misread our book or I didn't read this or that authority.

[Gretel]

I disagree on this one.

If a student is considered an undergraduate is defined by the school, it's not strictly eight semesters. Let's assume it takes a student 6 years, all 6 years is at least half time and all 6 years the AOC is available. Student can choose any 4 out of the 6 years to claim the credit.

[erchess]

I was unclear but we still disagree

I think the student in Gretel's example can claim AOC all six years. Note that he's not getting as much credit per year as someone who went to school full time for four years while claiming AOC. In my opinion the test is whether the person has completed eight semesters' worth of credits as of the beginning of the taxable year.

[BP.]

I think the student in Gretel's example can claim AOC all six years.

Not eligible for AOC for all 6 yrs.

See Pub 970, p. 13, flow chart 2-2. If you have already claimed AOC in 4 prior tax yrs, you aren't eligible for this credit any longer.

[dktax]

Can take Am Op credit?

So, I am thinking that they do qualify this year as they have never used the Hope or the Am Oportunity credit before. Just 4 years of the Tuition and fees. The students first 2.5 years were working toward a degree and then year before last he switched to a technical college and a different program altogether.

[oceanlovin'ea]

My opinion

This is just what I always thought. The first 4 years of college qualified for an education credit. If you used the AOC or tuition deduction depended on which gave you the best deduction for that year.
If it takes a student longer than 4 years to finish, then they either go to the Lifetime Learning credit or the tuition deduction. Tuition deduction doesn't have limitations as far as years.
I was of the opinion that the AOC is for the FIRST 4 years of schooling beyond high school.

Linda, EA

[erchess]

Four Years

Thank you to all who made this correction. It's good to know.