AOC when student is an undergrad and a grad student in same tax year

Paying for College
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<p>D's 1098T (she was in her second year of college until August and then began her professional degree program at the same institution in September) has the box checked for grad student. In the instructions for that box, it says that if you are a grad student, you cannot get the AOC. However, additional information on irs.gov says that if you are an undergrad and a grad student in the same year and you have not completed four years of undergrad education, you CAN get the AOC.</p>

<p>Has anyone had this situation and gotten an IRS notice denying the AOC (and then had to provide additional support)?</p>

<p>American</a> Opportunity Tax Credit: Questions and Answers</p>

<p>Q13. If a student was an undergraduate during the first part of the taxable year and became a graduate student that same year, will the student qualify for the American opportunity tax credit?</p>

<p>A. If a student has not completed the first four years of post-secondary education as of the beginning of the taxable year, and has not claimed the Hope scholarship credit and/or the American opportunity tax credit for more than four taxable years, the student can claim the American opportunity tax credit for qualified expenses paid during the entire taxable year.</p>

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<p>My son in law graduate with his BS in spring 2012 and then started his masters in the fall. he did claim the AOC using expenses from the last semester of his BS. I did wonder if there would be any issues as the 1098 did say he was a grad student and did not split out the undergrad and grad part of his expenses at all (we did for the tax return). So far, no problem. </p>

<p>I imagine we would have no problem supporting the claim for the AOC. But, based on prior dealings with the IRS, I hope we don’t have to as they are a pain. But don’t tell them I said that…</p>

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<p>Huh. Now that is interesting. He just claimed it for the undergrad expenses. I guess that is what they mean by qualified expenses though.</p>

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<p>Did son-in-law get the full credit? If not, it could be worth it to amend 2012.</p>

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<p>Hmm, I think it was close to full credit. I am thinking the qualified expenses would be the undergrad portion of his expenses.</p>

<p>This year he will be limited to the lifetime learning credit. Not nearly as good a deal unfortunately.</p>