AOC First Four Years of School

[erchess]

I apologize if this has been answered before but I did search and could not find it. I actually think I may have raised it before.

Everyone on this board knows that the AOC is only for students in their first four years of school. However, what is the definition of a year of school? I'm thinking one is busted if one has claimed education credits for four tax years already or has received a four year degree. The client I am trying to get AOC for is in at least year six of pursuing an undergrad degree and he or his parents have claimed some kind of education credit every year. Am I right in saying that he can't get AOC? I do know about Lifetime Learning and other benefits and I can get him something but I want to make sure I get him the best deal he can legally claim.

[OtisMozzetti]

I apologize if this has been answered before but I did search and could not find it. I actually think I may have raised it before.

Everyone on this board knows that the AOC is only for students in their first four years of school. However, what is the definition of a year of school? I'm thinking one is busted if one has claimed education credits for four tax years already or has received a four year degree. The client I am trying to get AOC for is in at least year six of pursuing an undergrad degree and he or his parents have claimed some kind of education credit every year. Am I right in saying that he can't get AOC? I do know about Lifetime Learning and other benefits and I can get him something but I want to make sure I get him the best deal he can legally claim.

Erchess, in my opinion you are asking a good question. The information in IRS publications is not all that clear. It would seem to me that if some piddley Lifetime Learning credit was claimed for two years and then Hope or AOL at least half time for another three years, then the student would not have completed 4 years of college unless a degree had been awarded. Therefore, an AOL would seem available if enrolled at least half time for a fourth year. This is just what it seems to me...

[oceanlovin'ea]

interesting question

It is an interesting question because the AOC is for the first four years of school. Since most students start school in the fall and finish their first year in the spring. School years are not the same as calendar years. Technically, the first four years of school would span 5 calendar years.
I have only taken it for 4 calendar years, but it would seem to me that we should be able to claim it for 5 calendar years.
Past the first 4 years of college education, the AOC wouldn't apply and you would have to use the Lifetime Learning.

Linda, EA

[Gary2]

There are two separate tests. The simple one is that for any given student, the AOC can only be taken for four separate tax years. So there's no ability to claim it for five years just because the first and last years are half years.

The second test is not having finished four years of postsecondary education. That one is harder to figure out. I'm not sure if the IRS has any clarifying regulations.

[OtisMozzetti]

...for any given student, the AOC can only be taken for four separate tax years....

Gary, I know this is a nitpick which you already knew, but years in which the Hope credit was taken also count against the limitation of four separate tax years.

[FEDUKE404]

Word is "four"

Gary, I know this is a nitpick which you already knew, but years in which the Hope credit was taken also count against the limitation of four separate tax years.

It's not a nit....

My understanding is that for purposes of the old/new Hope and/or the AOC that such a credit cannot be taken, regardless of the circumstances, in more than four tax years overall.

As for a student "going to college" for five years, the simple fix there is to be sure everything is paid "early" (by the end of tax year #4) for the senior.

Once the four years are used, other less juicy education credits etc could be considered, so it's not a total wash. Some folks even go to grad school.

FE

[OtisMozzetti]

It's not a nit....FE

My impression has been that Gary2 already knew that years in which the Hope credit was claimed, as well as years in which the AOC has been or will be claimed, both count toward the combined limit of 4 years. My reference to "nitpick" was a way to take it easy on Gary2, who seems to make valuable contributions here.

[Gary2]

I don't get offended at nitpicking; I do my share of it.

[FEDUKE404]

????

My impression has been that Gary2 already knew that years in which the Hope credit was claimed, as well as years in which the AOC has been or will be claimed, both count toward the combined limit of 4 years. My reference to "nitpick" was a way to take it easy on Gary2, who seems to make valuable contributions here.

So why even bring it up?

Regardless, my post really had nothing to do with a real or imagined nit and/or the skills of Gary2......

FE

[OtisMozzetti]

Whenever any tax rule requires certain conditions, then every one of those conditions has to be satisfied; otherwise the tax benefit obtained via that rule does not apply. Although the man on the street might consider some of those conditions to be nitpicking requirements, we tax pros all know that the required conditions have to be met.