Education Credits

[Christian]

A client's daughter is enrolled at a local university as a half time student which qualifies her for the American Opportunity Credit. She also took a side course at a local community college where her tuition expenses on the 1098-T indicate she was not a half time student. Can she use the Lifetime Learning Credit for the tuition expense of this side course or is it excluded. After review of the educational credit material I am myself unsure of the answer to this. If she qualified for the Lifetime Learning Credit as well will it require the preparation of an additional Form 8863 ?

[schirallicpa]

one or the other.  Sounds like she is in the first year(?)  The kids often take a college course in their spring year of high school and are not full time students.  Then they start regular college in the fall.  Just a heads up - if they are going to take all four years of college, sometimes it works out best to take the lifetime in that first semester year, and save the AOC for the next 4 tax years.  That helps later when the grants or scholarships drop off as they make their way thru or go into a fifth year.  

[Christian]

This was her second year at university with 2022 being her junior year. I am trying to determine if taking the American Opportunity Credit for some $11,000 of university tuition excludes her taking the Lifetime Learning Credit for the course at the community college.

[Slippery Pencil]

Add the two schools together and take one credit or the other.

 

[jklcpa]

27 minutes ago, Christian said:

trying to determine if taking the American Opportunity Credit for some $11,000 of university tuition excludes her taking the Lifetime Learning Credit for the course at the community college.

Yes, it does.  A taxpayer can claim only one of the credits per student per year, so you have to choose which one works out better.  The only way to have both credits on the same tax return is if there are two or more students where one takes the AOC and the other takes the LLC.

As Slippery Pencil said, add the two amounts together and use that total for one of the credits.

[Christian]

Well the amount from the community college does not qualify for the American Opportunity Credit. Frankly I have no idea as to how you would add the tuition from the community college to the university tuition without skewing the reported figure from the university. After taking a closer look at the figures the father will likely have enough tuition from the university to use the entire American Opportunity Credit and as noted by forum members the use of both credits for a student in the same calendar year is not available. 

[Slippery Pencil]

On the "Students" tab enter "2" for the number of schools.  Then enter the 1098s on the "Input" tab for each school.  The program adds it together. 

[jklcpa]

2 hours ago, Christian said:

Well the amount from the community college does not qualify for the American Opportunity Credit. Frankly I have no idea as to how you would add the tuition from the community college to the university tuition without skewing the reported figure from the university. After taking a closer look at the figures the father will likely have enough tuition from the university to use the entire American Opportunity Credit and as noted by forum members the use of both credits for a student in the same calendar year is not available. 

Why do you say the community college doesn't qualify?  If it is only because the student didn't attend at least 1/2 time at that school, the student already qualifies for being 1/2-tme student during 2021 at the university and meets that requirement.  As long as the course at the community college qualifies as part of his/her course of study that will ultimately lead to a degree, then that requirement is met also.  If the course isn't part of the degree program, then don't include it. 

[Christian]

Thanks Slippery that's very useful information as I have never encountered this matter before. The course in question is unrelated to her getting her degree. Her father sighs and says he will likely be paying for some course of study for her his remaining years on this planet.

[Lee B]

The credits don't have to be directly related to obtaining a degree as long the credits count toward the total credits needed to graduate.

[Hahn1040]

the daughter cannot take any credits if she is a dependent.  All credits go to the person claiming the student.

If the tuition to the university is over $4,000, that maxes out the AO credit.  Community college tuition does not need to be considered.  Parent can take only one education credit per year for the same student.