F8863 refundable eligibility

[Catherine]

Have a client (grown daughter of long-time clients) -- age 23, living on her own, supporting herself working nights/weekends while a full-time student. Parents do NOT claim her as a dependent and have not for several years.

F8863 instructions seem to say that she is NOT eligible for the refundable portion of the American Opportunity Credit because she supports herself. Huh? Am I reading that right? She does _not_ get the refundable portion because she is fully self-supporting and living on a shoestring?

TIA,

Catherine

[Gail in Virginia]

The instructions list three conditions, all of which must apply for you to not be able to get the refundable credit. I am assuming that she has at least one parent living (condition 2) and she is not filing a joint return for 2012 (condition 3). So that leaves us with her having to meet condition 1 to NOT be able to claim the credit. She does not meet a or b since she is 23 years old. She does not meet c because she has earned income greater than 1/2 of her support. Therefore, she can claim the refundable credit. I think the way it is worded is confusing.

[Janitor Bob]

I have had 4 of these "out-on-their-own" students this year.....3 did not qualify for the refundable portion. I had another that did qualify because she was part-time and not full-time.

The under age 24 rules really seem unfair (and really confusing)....but it is what it is.

IRS is stupid

[Catherine]

The instructions list three conditions, all of which must apply for you to not be able to get the refundable credit. I am assuming that she has at least one parent living (condition 2) and she is not filing a joint return for 2012 (condition 3). So that leaves us with her having to meet condition 1 to NOT be able to claim the credit. She does not meet a or b since she is 23 years old. She does not meet c because she has earned income greater than 1/2 of her support. Therefore, she can claim the refundable credit. I think the way it is worded is confusing.

You are right; they _are_ confusing -- it looks upon reading that if any ONE of the conditions apply, the kid is SOL.

Thank you.