American Opportunity Credit

[ljt99]

What is the name of your state (only U.S. law)? Ohio
I am confused by the instructions regarding "if under 24 and at least one of your parents was alive at the end of 2009" stipulation. Am I correct in reading that no one between the ages of 18 and 24 with at least one living parent qualifies for the refundable credit?

My son is 20 yrs old, a full-time third-year student, never claimed any type of education credit in the past, supports himself fully, does not live at home and is not claimed as a dependent on my tax return. Had grants and scholarships paying most of his expenses but paid $1200 of his own money toward qualified college expenses. Also pays income tax on the room and board portion of his grants ($6000) in addition to paying income tax on his earnings from work ($12,000).

Calls to the IRS for clarification have been no help as no one is able to provide a definitive answer saying whether he qualifies or not.

Since the credit is only available to students who are in their first four years of college, you would think that most of them would be under age 24. But it seems that anyone in that age group with a living parent is being disqualified.

Can anyone help to clarify?

Thank you!

 

[LdiJ]

What is the name of your state (only U.S. law)? Ohio
I am confused by the instructions regarding "if under 24 and at least one of your parents was alive at the end of 2009" stipulation. Am I correct in reading that no one between the ages of 18 and 24 with at least one living parent qualifies for the refundable credit?

My son is 20 yrs old, a full-time third-year student, never claimed any type of education credit in the past, supports himself fully, does not live at home and is not claimed as a dependent on my tax return. Had grants and scholarships paying most of his expenses but paid $1200 of his own money toward qualified college expenses. Also pays income tax on the room and board portion of his grants ($6000) in addition to paying income tax on his earnings from work ($12,000).

Calls to the IRS for clarification have been no help as no one is able to provide a definitive answer saying whether he qualifies or not.

Since the credit is only available to students who are in their first four years of college, you would think that most of them would be under age 24. But it seems that anyone in that age group with a living parent is being disqualified.

Can anyone help to clarify?

Thank you!

If your son has grants and scholarships that exceed his tuition, fees and books, then he wouldn't qualify for the credit anyway...no matter what his age is.

The purpose of the under age 24 rules is to stop parents who may not qualify for the credit because they make too much money, from shifting the refundable portion of the credit to their child.

 

[ljt99]

If your son has grants and scholarships that exceed his tuition, fees and books, then he wouldn't qualify for the credit anyway...no matter what his age is.

The purpose of the under age 24 rules is to stop parents who may not qualify for the credit because they make too much money, from shifting the refundable portion of the credit to their child.

Thank you for your reply.

He did not have grants and scholarships that exceeded his tuition, fees, and books. He was blessed with a lot of grant money but not enough to pay all of his tuition.

As one of the many Americans who was laid off in 2009, I did not earn more than $25,000 last year so the MAGI is not really an issue and I'm not attempting to deceptively shift the refund to my son.

The part of the 8889 form that seems confusing to everyone I've spoken with is in regard to the "under 24 with one parent alive at the end of 2009." Going back to the originally posted scenario, if my son did pay tuition from his own funds and does claim himself on his tax return, is he eligible for the refundable portion of the credit?

Thanks for any further input.

 

[LdiJ]

Thank you for your reply.

He did not have grants and scholarships that exceeded his tuition, fees, and books. He was blessed with a lot of grant money but not enough to pay all of his tuition.

As one of the many Americans who was laid off in 2009, I did not earn more than $25,000 last year so the MAGI is not really an issue and I'm not attempting to deceptively shift the refund to my son.

The part of the 8889 form that seems confusing to everyone I've spoken with is in regard to the "under 24 with one parent alive at the end of 2009." Going back to the originally posted scenario, if my son did pay tuition from his own funds and does claim himself on his tax return, is he eligible for the refundable portion of the credit?

Thanks for any further input.

Now I am totally confused. How can he have taxable scholarships (the portion that you state pays for his room and board), if his scholarships and grants do not exceed his tuition and books?

 

[ljt99]

Now I am totally confused. How can he have taxable scholarships (the portion that you state pays for his room and board), if his scholarships and grants do not exceed his tuition and books?

According to the tax instructions, scholarship funds paid directly to the institution but applied to room & board is always taxable. In this case, tuition ($24,000) and room/board ($6000) totals approximately $30,000. He received around $28,800 in scholarships and paid the remaining $1200 to the school with his own money. (He also paid around $1000 for books from his own funds.)

Can he consider that the $1200 he paid was applied to the tuition so that he can take the American Opportunity credit - either the refundable credit or the tax-reduction credit?

Thanks again for your input.

 

[LdiJ]

According to the tax instructions, scholarship funds paid directly to the institution but applied to room & board is always taxable. In this case, tuition ($24,000) and room/board ($6000) totals approximately $30,000. He received around $28,800 in scholarships and paid the remaining $1200 to the school with his own money. (He also paid around $1000 for books from his own funds.)

Can he consider that the $1200 he paid was applied to the tuition so that he can take the American Opportunity credit - either the refundable credit or the tax-reduction credit?

Thanks again for your input.

Scholarships and grants have to be applied to tuition, fees and books first. He is NOT eligible for the credit.