AOC Refundable Amt

[S T]

T/p has a son age 20, went full time college credits Jan through April 2011, less than half time Sept-Dec 2011

Son earned $ 17,000 in wages, parents did not support 50%

Filed Son on own return with AOC tuition and no refundable credits AOC - IRS corrected and sent AOC refundable with refund.

Age 20
Full time Student part of year,
Sons (Taxpayer earnings) were more than 1/2 support
Living Parents

I calculated as not eligible for AOC refundable portion, as "Full time"

Is the son eligible for the AOC refundable portion???

Thanks
Sandy

[dtlee]

T/p has a son age 20, went full time college credits Jan through April 2011, less than half time Sept-Dec 2011

Son earned $ 17,000 in wages, parents did not support 50%

Filed Son on own return with AOC tuition and no refundable credits AOC - IRS corrected and sent AOC refundable with refund.

Age 20
Full time Student part of year,
Sons (Taxpayer earnings) were more than 1/2 support
Living Parents

I calculated as not eligible for AOC refundable portion, as "Full time"

Is the son eligible for the AOC refundable portion???

Thanks
Sandy

If I understand your post: Yes.

In this situation, the son must meet all of these to be ineligible:

1. Have att least one parent alive at year end
2. Not be filing jointly
3. Be over 18
4. Be under 24
5. Be a Full-Time Student
6. Have earned income not over half of his support

If I understand your post, you said his earnings were over half of his support. Thus he meets all but #6. Thus, he is not ineligible.

[S T]

I question the full time student as he was a full time student for 4 months according to the College transcripts and then less then half time student for 4 months.

Doesn't the full time student make him ineligible for the refundable portion?

Sandy

[Gary2]

I question the full time student as he was a full time student for 4 months according to the College transcripts and then less then half time student for 4 months.

Doesn't the full time student make him ineligible for the refundable portion?

What full time student [rule]? There is no requirement that the student be a full time student to get the refundable part.

[dtlee]

I question the full time student as he was a full time student for 4 months according to the College transcripts and then less then half time student for 4 months.

Doesn't the full time student make him ineligible for the refundable portion?

Sandy

Okay.

Then he misses on 5 and 6.

He only has to miss on one to be eligible for the refundable credit. He misses on two.

[OtisMozzetti]

What full time student [rule]? There is no requirement that the student be a full time student to get the refundable part.

There is an AOC rule that a student has to be a full time student, i.e. at least a half time student, in order to get the AOC at all, refundable part or nonrefundable part.


What exactly is considered to constitute a full time student may be at issue: I have always heard that a full time student is someone who takes at least half the normal load for some part of five months of the year. At least that is the definition of student insofar as being a qualifying child.

[appelman]

Thdere are not 6 conditions for being ineligible.

There are only 3, one of which has 3 either/or subconditions. From p. 15 of Pub. 970:

You do not qualify for a refund if items 1 (a, b, or c), 2, and 3 below apply to you.
1. You were:
a. Under age 18 at the end of 2011, or
b. Age 18 at the end of 2011 and your earned income (defined below) was less than one-half of your support (defined below), or
c. Over age 18 and under age 24 at the end of 2011 and a full-time student (defined below) and your earned income (defined below) was less than one-half of your support (defined below).
2. At least one of your parents was alive at the end of 2011.
3. You are filing a return as single, head of household, qualifying widow(er), or married filing separately for 2011.

The definitions that follow are also relevant, particularly the definitions of full-time student and support:

Support. Your support includes all amounts spent to provide you with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. To figure your support, count support provided by you, your parents, and others. However, a scholarship received by you is not considered support if you are a full-time student. See Publication 501 for details.

Full-time student. You are a full-time student for 2011 if during any part of any 5 calendar months during the year you were enrolled as a full-time student at an eligible educational institution (defined earlier), or took a full-time, on-farm training course given by such an institution or by a state, county, or local government agency.

And for the general conditions for being a qualifying student for AOC, see p. 13 of the Pub. Note that there is no "full-time" requirement in that table.

As I read the original post, the student meets conditions 2 and 3, but does not meet any of 1a, 1b, or 1c. He should therefore qualify for the refundable credit.

[dtlee]

There are only 3, one of which has 3 either/or subconditions. From p. 15 of Pub. 970:

You do not qualify for a refund if items 1 (a, b, or c), 2, and 3 below apply to you.
1. You were:
a. Under age 18 at the end of 2011, or
b. Age 18 at the end of 2011 and your earned income (defined below) was less than one-half of your support (defined below), or
c. Over age 18 and under age 24 at the end of 2011 and a full-time student (defined below) and your earned income (defined below) was less than one-half of your support (defined below).
2. At least one of your parents was alive at the end of 2011.
3. You are filing a return as single, head of household, qualifying widow(er), or married filing separately for 2011.

The definitions that follow are also relevant, particularly the definitions of full-time student and support:

Support. Your support includes all amounts spent to provide you with food, lodging, clothing, education, medical and dental care, recreation, transportation, and similar necessities. To figure your support, count support provided by you, your parents, and others. However, a scholarship received by you is not considered support if you are a full-time student. See Publication 501 for details.

Full-time student. You are a full-time student for 2011 if during any part of any 5 calendar months during the year you were enrolled as a full-time student at an eligible educational institution (defined earlier), or took a full-time, on-farm training course given by such an institution or by a state, county, or local government agency.

And for the general conditions for being a qualifying student for AOC, see p. 13 of the Pub. Note that there is no "full-time" requirement in that table.

As I read the original post, the student meets conditions 2 and 3, but does not meet any of 1a, 1b, or 1c. He should therefore qualify for the refundable credit.

I list these as six because people get confused about this too easily the way the IRS describes it.

We agree on your numbers 2 and 3 (Except I replace all those statuses with "not filing a joint return").

However, let's not pretend we do not know the age which was clearly stated. For someone who is 20 years old, they must meet the conditions stated in 1c (all four of them) to be disallowed the refundable portion. 1a and 1b have nothing to do with this scenario. The four conditions in 1c are:

• Over age 18
• under age 24
• a full-time student
• your earned income must be one-half of your support or less

Regarding the last item, it is not generally critical, but while the IRS publication says "your earned income was less than one-half of your support" here is how the wording is in the 1(g)(2)(A)(ii)(II):

whose earned income (as defined in section 911(d)(2)) for such taxable year does not exceed one-half of the amount of the individual's support (within the meaning of section 152(c)(1)(D) after the application of section 152(f)(5) (without regard to subparagraph (A) thereof)) for such taxable year

The code is talking about someone who cannot receive the refundable credit if their income does not exceed one-half of the individual's support. The publication should be saying that you cannot receive it if your income is one-half of your support or less. In other words, to me:

Not Greater Than (i.e., earned income does not exceed one-half of support)

means

Less Than or Equal To (i.e., earned income must be one-half of your support or less)

This student fails your 1c test by virtue of earning too much and not being a full time student. There is no way this student should not be eligible for the refundable credit.

Let's not get caught up in the IRS publication information to document how many tests there are. While they show three (of which 1 has 1, 2, or 4 parts), the tests that a 20 year old must meet in the code are as follows:

1(g)(2)(A)
such child—

1(g)(2)(A)(i)
has not attained age 18 before the close of the taxable year, or

1(g)(2)(A)(ii)

1(g)(2)(A)(ii)(I)
has attained age 18 before the close of the taxable year and meets the age requirements of section 152(c)(3) (determined without regard to subparagraph (B) thereof), and

1(g)(2)(A)(ii)(II)
whose earned income (as defined in section 911(d)(2)) for such taxable year does not exceed one-half of the amount of the individual's support (within the meaning of section 152(c)(1)(D) after the application of section 152(f)(5) (without regard to subparagraph (A) thereof)) for such taxable year,

1(g)(2)(B)
either parent of such child is alive at the close of the taxable year, and

1(g)(2)(C)
such child does not file a joint return for the taxable year.

and

152(c)(3)Age requirements.—

152(c)(3)(A)In general.—
For purposes of paragraph (1)(C), an individual meets the requirements of this paragraph if such individual is younger than the taxpayer claiming such individual as a qualifying child and—

152(c)(3)(A)(i)
has not attained the age of 19 as of the close of the calendar year in which the taxable year of the taxpayer begins, or

152(c)(3)(A)(ii)
is a student who has not attained the age of 24 as of the close of such calendar year.

[appelman]

So the IRS was right.

I think we're all in agreement.

[dtlee]

I think we're all in agreement.

I agree

[Gary2]

You do not qualify for a refund if items 1 (a, b, or c), 2, and 3 below apply to you.
1. You were:
a. Under age 18 at the end of 2011, or
b. Age 18 at the end of 2011 and your earned income (defined below) was less than one-half of your support (defined below), or
c. Over age 18 and under age 24 at the end of 2011 and a full-time student (defined below) and your earned income (defined below) was less than one-half of your support (defined below).
2. At least one of your parents was alive at the end of 2011.
3. You are filing a return as single, head of household, qualifying widow(er), or married filing separately for 2011.

One could simplify item 1 (for our purposes) by rewriting the list as:

You are disqualified from the refundable credit if all of the following apply:

1. You meet the age test for being a qualifying child, other than because of disability.
2. If 18 or over at the end of the year, your earned income was not more than half your support.
3. At least one of your parents was alive at the end of the year, and
4. You aren't filing a joint return.

I say "for our purposes" since I don't expect the IRS publication to say "age test" or "qualifying child" without cross-references, nor do we need the precision of spelling out "disability" or excluding the "younger than taxpayer" rule for QC.

Or one could simplify the entire set by saying "You can't get the refundable credit if you're subject to the Kiddie Tax (or would be if you had enough unearned income)."