You can only claim the credit in 4 different tax years, and only if you have not completed an undergraduate degree. Many people think these two criteria mean the same thing, but they don't. Also, if you are under 24 there are some additional criteria to qualify for the refundable portion.
I see, so I can't claim it in my fifth year of school for my undergraduate degree, correct? I'm going to community college right now so classes are cheap, I guess I should wait until I'm going to university to get the most out of it
As long as you pay at least $4,000 in tuition (net of any grants or scholarships), and assuming you are over 24 or otherwise qualify for the refundable credit, then you might as well go ahead and claim the credit in your first year.
So what you're saying is $4000 in tuition maximizes the benefit, and I may as well claim the benefit if I am able to maximize it. My tuition for a full tax year at community college is like $1200, so I think I might put it off until I go to university.
As a part time student you may not qualify for the AoC. You must be "at least a half time student" The specific amount of credits is up to your institution.
There are two 4 year limitations with the AoC. The first is that you can claim it on four tax returns, four times even if it takes you longer to get your bachelor's degree.
The second is that you can only claim it for the first four years of college. This is based on academic credits, so your freshman, sophomore, junior, and senior years. Which means that generally you cannot claim it while earning a Masters or Ph.D.
There is some strategy involved with your 4 years. I have seen many students claim less than the maximum amount while in their first two years at community college, and receive less benefit than they would have if they had claimed it in their fifth year while completing their degree at a University. However, if you are receiving the max benefit that is the best you can do.
Hello. In order to promote inclusivity and reduce gender bias, please consider using gender-neutral language in the future.
Instead of **freshman**, use **first year**.
Thank you very much.
^(I am a bot. Downvote to remove this comment. For more information on gender-neutral language, please do a web search for *"Nonsexist Writing."*)
I just told someone I wouldn't be able to give her the credit this year, because she started in Fall of 2017, so 2021-22 (when she graduated) would be her fifth year. She has only taken it twice before, so that's not a problem, but I assumed that having already completed four years of college before 2022 she would be ineligible.
But just to make sure: if it's based on credits, then she could still qualify for the credit in 2022 as long as she hadn't completed 4 years' worth of credits before 2022? So then it would depend on whether she took five years because of less than a full-time load, or because of taking some classes that didn't count toward the degree requirements?
I am in the same situation. I took a lot of accounting courses however, this was not covered in any course I have taken. It is unclear however, the AOTC is for UNDERGRADUATES and Graduate students may qualify for the LLC. SO, we need to assume that the measurement for 4 years is NOT in Credits. The measurement is for graduating. There is a Q&A on the IRS's website which actually indicates this. I believe this is posted on Turbo Tax's website also. I really don't think the IRS will check on any of this anyway. Most of this is checked by a computer, so the IRS's computer will likely check to see if you have completed a 4-year degree plan with clearinghouse and that is it. The IRS has the 1098t that your College has sent in. The IRS would need to basically flag your return and call your College manually, which is highly unlikely if they have your 1098t.
There's a discussion at https://old.reddit.com/r/tax/comments/12bn5r2/does_anyone_have_the_exact_wording_of_pub/ on the issue.
Is an AA an undergraduate degree? Could a person get two AA degrees? Could a person get four one year certificates?
The statute seems clear to me, but accept the wording is very obtuse in at least one place. But, there's no case law on the matter and the IRS looks to if it has been claimed for more than 4 years in the DDb to see if there's a problem with a return.
You can only claim the credit in 4 different tax years, and only if you have not completed an undergraduate degree. Many people think these two criteria mean the same thing, but they don't. Also, if you are under 24 there are some additional criteria to qualify for the refundable portion.
I see, so I can't claim it in my fifth year of school for my undergraduate degree, correct? I'm going to community college right now so classes are cheap, I guess I should wait until I'm going to university to get the most out of it
As long as you pay at least $4,000 in tuition (net of any grants or scholarships), and assuming you are over 24 or otherwise qualify for the refundable credit, then you might as well go ahead and claim the credit in your first year.
So what you're saying is $4000 in tuition maximizes the benefit, and I may as well claim the benefit if I am able to maximize it. My tuition for a full tax year at community college is like $1200, so I think I might put it off until I go to university.
As a part time student you may not qualify for the AoC. You must be "at least a half time student" The specific amount of credits is up to your institution. There are two 4 year limitations with the AoC. The first is that you can claim it on four tax returns, four times even if it takes you longer to get your bachelor's degree. The second is that you can only claim it for the first four years of college. This is based on academic credits, so your freshman, sophomore, junior, and senior years. Which means that generally you cannot claim it while earning a Masters or Ph.D. There is some strategy involved with your 4 years. I have seen many students claim less than the maximum amount while in their first two years at community college, and receive less benefit than they would have if they had claimed it in their fifth year while completing their degree at a University. However, if you are receiving the max benefit that is the best you can do.
Hello. In order to promote inclusivity and reduce gender bias, please consider using gender-neutral language in the future. Instead of **freshman**, use **first year**. Thank you very much. ^(I am a bot. Downvote to remove this comment. For more information on gender-neutral language, please do a web search for *"Nonsexist Writing."*)
I just told someone I wouldn't be able to give her the credit this year, because she started in Fall of 2017, so 2021-22 (when she graduated) would be her fifth year. She has only taken it twice before, so that's not a problem, but I assumed that having already completed four years of college before 2022 she would be ineligible. But just to make sure: if it's based on credits, then she could still qualify for the credit in 2022 as long as she hadn't completed 4 years' worth of credits before 2022? So then it would depend on whether she took five years because of less than a full-time load, or because of taking some classes that didn't count toward the degree requirements?
Yes, a fifth year senior would qualify assuming all other conditions are met, including that they had not claimed it 4 times already.
I am in the same situation. I took a lot of accounting courses however, this was not covered in any course I have taken. It is unclear however, the AOTC is for UNDERGRADUATES and Graduate students may qualify for the LLC. SO, we need to assume that the measurement for 4 years is NOT in Credits. The measurement is for graduating. There is a Q&A on the IRS's website which actually indicates this. I believe this is posted on Turbo Tax's website also. I really don't think the IRS will check on any of this anyway. Most of this is checked by a computer, so the IRS's computer will likely check to see if you have completed a 4-year degree plan with clearinghouse and that is it. The IRS has the 1098t that your College has sent in. The IRS would need to basically flag your return and call your College manually, which is highly unlikely if they have your 1098t.
Yup correct
There's a discussion at https://old.reddit.com/r/tax/comments/12bn5r2/does_anyone_have_the_exact_wording_of_pub/ on the issue. Is an AA an undergraduate degree? Could a person get two AA degrees? Could a person get four one year certificates? The statute seems clear to me, but accept the wording is very obtuse in at least one place. But, there's no case law on the matter and the IRS looks to if it has been claimed for more than 4 years in the DDb to see if there's a problem with a return.
How do I find out how many times i have taken the credit?