american opportunity tax credit questions - 2 kids & 4 calendar yrs & dual enrollment?

[bgbg4us]

your thoughts are appreciated –

1. AOTC can be taken for 4 calendar years, right? so if you claim a kids expenses fall of freshman year, does that mean you can’t claim expenses spring of senior year? e.g.: fall 2015, all of 2016, all of 2017, all of 2018 – none of spring, 2019?

2. is AOTC taken for each kid that is in college?

3. Payments to colleges for dual enrollment classes while in high school can NOT be used for AOTC, right?

[mommdc]

As far as I know the credit is for each student. For us we pay bill in Aug and Dec so we count both semesters for 2015. I think AOTC is supposed to be available until at least 2017.

My D paid for one dual enrollment class and since she was not considered a degree seeking student and not at least half time and concurrently enrolled in high school we did not think we could claim this for an education credit.

[twoinanddone]

Yes to all. You have 4 tax years to use it. You have those 4 years for each child. You have to check the AOTC rules, but I believe you have to be enrolled as a degree seeking student, so a high school student wouldn’t qualify, but you also may not want to use up your 4 years either. Do you pay $4000/yr for the dual enrollment courses?

[mommdc]

Yes and the AOTC is only for 4 years max

[bgbg4us]

thanks for reminding me that its not guaranteed to go on past 2017. that’s helpful with planning!

[twoinanddone]

AOTC has been made permanent, or at least as permanent as a tax credit can be.

[mommdc]

That would be great if AOTC is permanent, I have younger kids that might go to college.

Is there a source for this from the IRS?

I could only find info from Forbes and CNN money.

[4kidsdad]

^This source is from Congress, see http://docs.house.gov/billsthisweek/20151214/121515.250_xml.pdf

SEC. 102. ENHANCED AMERICAN OPPORTUNITY TAX CREDIT MADE PERMANENT.

[Madison85]

For payments made in the 5th calendar year, consider the Lifetime Learning credit.

[mommdc]

Thank you @4kidsdad and @Madison85 that is helpful!

[bgbg4us]

@Madison85 - can you briefly explain how lifetime learning credit works? thanks. .

[4kidsdad]

See https://www.irs.gov/publications/p970/ch03.html

What is the tax benefit of the lifetime learning credit? For the tax year, you may be able to claim a lifetime learning credit of up to $2,000 for qualified education expenses paid for all eligible students. There is no limit on the number of years the lifetime learning credit can be claimed for each student.
A tax credit reduces the amount of income tax you may have to pay. Unlike a deduction, which reduces the amount of income subject to tax, a credit directly reduces the tax itself. The lifetime learning credit is a nonrefundable credit. This means that it can reduce your tax to zero, but if the credit is more than your tax the excess will not be refunded to you.
Your allowable lifetime learning credit may be limited by the amount of your income and the amount of your tax.

[bgbg4us]

thanks – looks like theres different income maximums. but good to know.

[dcplanner]

There is a tuition tax break you can take for the dual enrollment classes. It has no max number of years. We got back about a quarter of what we paid for the classes but that probably depends on your income bracket.

[vrmiddle]

dcplanner, what’s the name of the tuition tax break you’re referring to? Thank you!

[BelknapPoint]

dcplanner, what’s the name of the tuition tax break you’re referring to? Thank you!

Probably the Lifetime Learning Credit – 20% credit for the first $10,000 of qualified expenses.