What You NEED To Know About The American Opportunity Tax Credit!
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- Опубликовано: 3 сен 2020
- The American Opportunity Tax Credit is a tax credit in the U.S. available for the first 4 years of education. In this video, I discuss the who, what, when where, why, and how much of this tax credit. Everything that you would need to know about the AOTC can be found in this video.
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#AOTC #TaxCredit #College
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YES! Saw this video and started amending my previous returns. As a broke college student who pays out of pocket this video made my year.
Wow! I'm so glad that I could have such a positive impact in your life, Thank you for your positive feedback!
thanks for this video. I just started filing my own taxes; this video proved helpful to me. I did like and subscribe!
Awesome! Thank you for watching, I hope that I can provide you with even more ongoing value! :)
Great explanations! Nice to know about about tax on the other side of the pond aswell
Thanks Friend!
I love your educational videos.
I'm very glad that you find them helpful, thank you!
Very informative video. Too many people missing out on this great content :(
Thank you very much! I really appreciate the kind words!
➡Checkout My Highly Recommended Resources: oncashflow.com/resources
This is a great time to work on taxes, make estimations on how one’s 2020 return will look, and perhaps plan some yearend actions.
I've certainly been keeping a running tab myself!
you saved me thank you!!
You are very welcome! Thank you for watching!
Thank you.
Absolutely, I'm very glad that I could help :)
Im so glad you posted this, i almost filed for this tax credit and i didn't qualify for it. This content is really what we need on RUclips! Thank you so much :)
I'm so glad that I could help!
Thank you for letting people know about this valuable credit. It's super important. One reason students miss this credit all the time is because they have scholarships or grants. They should NOT miss the credit, and they can go back and claim it if they missed out.
The complicatedness of the tax code probably leads many people to miss out on credits that they should be getting :(
@@OnCashFlow That's true! How can I help you get your messages out? I'm subscribing.
Wow thank you so much! The best thing that you can do to help is to watch more of my videos and like them as well so that RUclips's algorithm will spread the message further. Thank you again!
@@OnCashFlow you got it.
@@collegetaxrefunds Thanks! You're Awesome!
Thank you for utilizing this platform to explain and share important information with others.
I have a question: I went to Community College for 3 years and then transferred to a University for 3 years (2017-2020). My parents have always claimed my school taxes and put me as dependent.
I graduated last year May of 2020 and about two weeks ago I filed my taxes independently and once I got home I’ve noticed my tax preparer answered: “Yes” to “Did the student complete the first 4 years of postsecondary education before 2020?” Is this correct? Even though I did not complete before 2020?
I am confused and not sure if it was an error on the tax preparer’s side into why I was not eligible for the American Opportunity Credit if I did not complete my 4 years before 2020; I graduated-completed my 4 years during 2020.
I would appreciate it if you can explain.
Thank you for your patience.
Thank you very much for your positive feedback. While I cannot give tax advice, I can give you my opinion on the matter. I believe that the answer depends. Your parents may have been claiming the AOTC for 4 years already, therefore you are ineligible. You may have already had 4 years' worth of college credit prior to 2020, even though you weren't yet awarded a degree. The tax filer may have then claimed the lifetime learning credit rather than that AOTC because of it.
Hey! Awesome video! Unique question, if I already have a bachelors degree, but am pursuing a second bachelors degree can I apply for this tax credit? Or is it a no go since I already have an initial BS?
Thank you very much for the positive feedback! I really do appreciate it! The AOTC cannot be used once you already have an undergraduate degree. You might be able to claim the Lifetime Learning Credit. I have a video on the LLC that you might fund useful!
ruclips.net/video/6sit0K77DvQ/видео.html
Thank you for the great content! I am wondering if you could help me with the refundable part on line 7 where it lists additional conditions for under 24 years old student.
I am currently 21 years old and criteria 2 and 3 both applicable to me (parent & married filling joint). However, my total earned income is more than half of my support. Am I still qualified for the refund part of AOTC?
Thank you for your help!
Try this:
www.irs.gov/help/ita/am-i-eligible-to-claim-an-education-credit
Anytime I see AOTC, I instantly think of that Episode II: Star Wars movie.
Haha, unfortunately, I am unaware of what that means D:
So in taking this engineering class that requires crazy computer specs. So can I claim that in the AOTC?. I paid zero this year in tuition and fees so I don't have the 1098 form. The computer is in the syllabus and in the class description.
Here is what the IRS has to say: "For the AOTC but not the LLC, qualified tuition and related expenses include amounts paid for books, supplies and equipment needed for a course of study."
www.irs.gov/credits-deductions/individuals/education-credits-questions-and-answers
I would say that if your computer is required for your course then it would count as a qualified educational expense for the AOTC but I am not a licensed tax professional and you should consult one if you want legal tax advice. I hope this helps!
Are there any more tax breaks coming up for 2020 related to the pandemic? I think you mentioned before that there will be opportunities related to donations?
They have the stipulation where you can borrow from a retirement account and pay it back in 3 years without any tax consequences, they have the above the line $300 tax deduction for charitable giving per person even if you take the standard deduction, and there's a bunch of employer tax credits for retaining employees. That's all I have heard of specifically.
@@OnCashFlow Thank you Zach!
@@neosoul2010 Of course! I'm always happy to try and help! 😊
Hello, I was a part time student on and off in community College for 4 years and never took the AOTC. I didn't graduate but now I am attending a trade school that qualifies for AOTC but I'm not sure I can take it if I've already done 4 years of college?
I think it depends on if you graduated with a degree
I graduated w a bachelors, went back to community college for pre-requisite classes atleast half time. I am assuming I am eligible but what do you think? I am under the income thresholds.
Unfortunately, if you already have a Bachelor's degree, then you can't use the AOTC. You might be able to use the Lifetime Learning Credit (LLC). I have a video on that too, it might help you out.
ruclips.net/video/6sit0K77DvQ/видео.html
I have a few questions. My parents make less than the $160,000 amount and I’m going to begin my undergraduate next year. I believe they will be paying at least $4,000 on my education expenses. When would they be receiving the $2,500? Would this mean that they pay less taxes so what they don’t pay can be used for college?
the way it would work is that they get the $2500 when they file their tax return. that credit should reduce their net tax bill and then be refunded to them
Does the academic period have to be completed by the beginning of the tax year to qualify for the credit or do you have to be enrolled?
I don't think the Academic period needs to be completed by the beginning of the tax year. The exact verbiage from the IRS is "Be enrolled at least half time for at least one academic period* beginning in the tax year"
www.irs.gov/credits-deductions/individuals/aotc
The IRS tool does not state now much your AOC will be, only if your are eligible
Oh darn, sorry if I was mistaken. There are some free online calculators that can do this for you that I hope you can utilize.
I graduated May 2020, started working in March 2020, but still have 1098-T for the year 2020. This will be my first time filing taxes as my parent claimed me for the last 4 years of college. However, she can't claim me this year. I am still eligible to get this credit, correct?
I believe it would depend on if your parent claimed the AOTC for the past 4 years. If so, then you shouldn't be able to claim it, if it has already been claimed for 4 tax years.
So I transferred to virtual school last year. I built a PC and a home office desk setup. Can I claim those things for this?
I can't give tax advice, but personally, I feel like that would be a bit excessive. A desk is not a required educational item. You built a PC and therefore it was probably pretty expensive, and might not be considered "ordinary and necessary" as an educational expense. A moderately priced computer can be argued that it is necessary for online schooling, but one that was built? Typically used for gaming? I don't know.
If the tax savings of claiming it would be significant for you, then look into getting a professional consultation from a CPA or similar. Spending $100 to get a $2,000 tax credit would definitively be worthwhile IMO. I hope this helps a bit!
I wasn’t aware that I had 1098 -T forms but I already filed my taxes for 2019-2021 I just found out about this and I claimed it for this years taxes but is there anyway I can still claim the last 3 years I never claimed?
Yes, You can do amended returns for up to 3 years.
So do I need to pay out of pocket. What if payments were made with student loans??
Student loans are considered you paying out of pocket because you have to pay that money back.
What if the scholarships amount is higher than educational expense on 1099-T?. Are you still eligible for credit?
It's my understanding that you can choose to have the scholarships offset your qualified tuiton bill and/or choose to have them taxed as income. So if you choose to take some of the scholarships as taxable income, then you could still have qualified education expenses possibly qualify you for the credit.
www.irs.gov/pub/irs-utl/Interaction_of_Scholarships_and_Tax_Credits.pdf
If I have a associates degree but went back to school For my bachelors degree, can I get it ? I never knew about this during my community college years.
You can possibly qualify for it, yes.
Would I qualify for this credit if I’m pursuing major and working as independent?
Yes, you could qualify for the AOTC if you are an independent student! 😀
If I qualified for the AOTC, but already filed my 2020 taxes, can I apply for this tax on my next return?
It is my understanding that the expenses must have been had in the same tax year as you file your return (well, you can use school year in some cases). So this means you can't have qualified expenses in 2020 and use them for the AOTC two years later. In your case, you probably would want to amend your 2020 tax return. I hope that I could help a little, Jessica!
Four consecutive years. Can you skip a year and take the American Opportunity.
For example. take credit first 3 years...skip 4th year....take credit year 5?
Yes, you can skip years. It's for a total of 4 years (4 tax returns)
If I graduated college with a BA in 3 years and am now attending graduate school, would I qualify since this year is technically my 4th year in higher education?
Unfortunately, I would say no because the AOTC is for undergraduate only. Might be able to claim the Lifetime Learning Credit. www.irs.gov/credits-deductions/individuals/aotc
If I graduated in May 2021 and received a 1098-T for 2021, can I claim this credit for the 2021 tax year (which is filed in 2022) even though I’ve completed my four years? I know the IRS site says that “the student must not have finished the first four years of higher education at the beginning of the tax year”, but I’m having trouble interpreting this. Thank you!
In other words, I was in my last semester of my fourth year at the beginning of 2021. It seems to me that I qualify. I just want to be sure!
I think as long as you didn't claim it for 4 years already and you meet the other requirements then it should be okay. Your quote would mean that you didn't graduate with a 4 year degree and then start on another degree. i.e as if you graduated in May 2021 then you started working on another degree in 2022, you wouldn't be eligible for the AOTC in the 2022 tax year when you file in 2023.
I would try taking the IRS questionnaire for education credits:
www.irs.gov/help/ita/am-i-eligible-to-claim-an-education-credit
I hope this helps a little! :)
Based on the requirements to claim the tax, I am eligible, including that my gross income is below $80,000. But my scholarships are greater than my tuition expense. Can I still claim the AOTC for being a full-time student? This is a unique situation and there is almost no information on the web. Do you know the answer to this question?
I'm not qualified to give your a definitive answer. But you should be able to claim the scholarships as taxable income, and then claim the tuition and other expenses for the AOTC.
I too have this same problem. I could not find anything and already filed my taxes
@@jasonvelez-pico6254 I'd still have to say the same as above. I think that it can work that way.
Can I tell my tax man to add the AOTC & he can do it from behind his desk?
You can tell him if you believe you are entitled to the AOTC, sure!
Hi, I would like to ask you a question, this American opportunity credit is only for students ? Because I paid a tax preparer to do my taxes and I noticed that she filled the AOTC form and Im not an student but she put in there that I went to college which is a lie, I've never been in college I work in the fields picking strawberries....Is this considered fraud ??
I'm not a tax professional, but it sounds fraudulent to me...
I just worked for two months because of the pandemic. Can I apply for this credit? Also, my mom doesn't file taxes because she's disabled. She can apply or not?
If you have qualified higher education expenses, haven't taken it for 4 total years, meet the income requirements, etc. then y'all should be able to. You do have to file taxes in order to claim any tax credit in the first place.
Hi ! What if I don’t have my document expenses ? 🥺
You need to have proof if you end up getting audited by the IRS! D:
What if I went to tech school and was a full time student for 7 months ? Would I still qualify for the American Opportunity Tax Credit ?
Possibly, If the school meets the requirements of the AOTC and you were full time then yeah. Try taking the Education tax credit questionnaire on the IRS website. Google it and it should be the first result.
Hello, Can I claim the AOC tax credit if im filing jointly married. I am a part time student. My tuition fees were fully paid by Financial aid grants. So I never paid anything out of pocket. I did receive a 1098-T and box 1 is $2250.00 and box 5 is $7376.00 Please help
It sounds to me on the surface that you might be able to file for the AOTC. It would most likely be along the lines of claiming the pell grant as income used for living expenses and having the tuition count towards the credit. I would get help from a tax professional or use a really good user friendly tax preparation software (I have always used TurboTax myself)
I'm a part-time student on campus but my received qualified tuition and related expenses are $33,936 and my scholarship grants are 22,371 so am I eligible if so how much college tax credit money am I getting?
Try using an online calculator for the AOTC, there are some great ones that are completely free. If your tuition and expenses were that high, then off the top of my head, you should qualify for the maximum AOTC if you meet all the other requirements.
Can both parent and dependent college student claim this credit? The cost of tuition was over 25k
I think that if the student is considered a dependent, then only the parent can claim the tax credit.
Hey maybe you can help me out. I'm not sure whether or not I qualify for this credit this year, because I have already taken the credit for 4 years (2016-2019) but that only covered my first 3 and a half years of school (since school starts in the fall and ends in the spring, can I get credit for my spring 2020 semester?) Basically I'm not sure whether the "4 years" in question applies to the full 4 years (8 semesters) of education, or if it means 4 calendar years only (just 7 semesters).
Sorry if that wording is confusing, any help would be appreciated.
Hello! I cannot give tax advice, but I can offer my opinion on the matter. I think that you wouldn't be able to claim it because it seems that you have already claimed the credit on 4 tax returns? One of the requirements is:
"Not have claimed the AOTC or the former Hope credit for more than four tax years"
So If you have it claimed on 4 tax returns, then that would be the maximum. Luckily, you could still qualify for the lifetime learning credit. I have a video on that as well that you might find helpful :)
@@OnCashFlow yeah fair enough I think you're right. Appreciate the reply!
@@reputablerascal1657 Anytime, I'm always happy to help!
What if I am an international Student (F-1) on my fourth year?
This discussion post on TurboTax might answer your question:
ttlc.intuit.com/community/college-education/discussion/can-an-international-student-on-f-1-visa-claim-education-and-tution-credits-through-1098t-form/00/663197
What if you've never claimed this credit, but you've already attended undergrad. Am I still eligible?
I cannot give definitive tax advice, but I do not think you are eligible, unfortunately. The IRS says:
"Not have finished the first four years of higher education at the beginning of the tax year"
my grants/scholarships are way higher than my qualified expenses yet my grants/scholarships covered non-qualified expenses such as room and board so what can u do about this?
It depends, they may become taxable scholarships that you pay income tax on.
www.irs.gov/taxtopics/tc421
I am an international graduate student, just completed my 2 years master's degree and now got a job on OPT, I just received the Form 1098-T from my university. How can I utilize this form, I haven't filed any tax yet, am I supposed to give this form to my company's HR who will be preparing my paystubs?
Thanks!
No, it doesn't go to your HR. You have to use that form and import information from it onto your 1040 tax return. I would suggest that you get some help from a tax preparer since this is your first time :)
@@OnCashFlow ok, thank you.
@@MHJalani I'm happy to try and help! :)
Hi I usually claim my daughter as my dependent , during 2020 she has a baby and she is going to filing her taxes as a head of household, can she claim this credit?
If she is a student, is considered "independent" with qualified education expenses, then she should be able to.
Does it counteract SE tax?
No, only federal income tax
I am a Full time Student but by the end of this year I will have paid over 3k in taxes. I am hoping to get a good refund for being a student. I am filing as single and will I be able to get the full 2500?
It depends on your income, how much aid you received, how much you paid out of pocket, etc. Here is the IRS page for it:
www.irs.gov/credits-deductions/individuals/aotc
Hope that helps!
A college student received part scholarship and has 529 pay for tuition. Can this student claim AOTC?
Maybe. I think it depends on how much the scholarship was vs tuition paid on the 1098T plus other qualified expenses.
Here's a good short article on it:
www.hrblock.com/tax-center/lifestyle/education/irs-american-opportunity-credit/
If I lost the receipt for the supplies I purchased, is it too risky to claim in case they audit?
In case of an audit, you technically have to substantiate ALL claimed expenses. Depending on how much you are claiming, and the rest of your tax return, the chance of you getting audited can vary. Most of us actually have a very low chance of getting audited. The highest chance group is very high income earners that are self-employed with a great amount of deductions and credits.
@@OnCashFlow I greatly appreciate your reply, sir!
@@FueledByRyan0 No problem! I'm always happy to help!
I owe 1300 to my community college for the past year and spent a little over 200 for books would I qualify for the AOTC or is it not worth it and easier to do a simple tax return?
Try this from the IRS:
www.irs.gov/help/ita/am-i-eligible-to-claim-an-education-credit
👏👏👏
Thanks
What happens if you claim more than 4 years ?
Here is what the IRS has on their website:
"Be careful claiming the AOTC
Make sure you are qualified before claiming the credit. And, make sure you keep copies of all the documents you used to find out if you qualify and determine the amount of your credit. If the IRS audits your return and finds your AOTC claim is incorrect and you don’t have the documents to show you qualified, you must pay back the amount of the AOTC you received in error with interest. The IRS may also charge you an accuracy or a fraud penalty. Or, you can be banned from claiming the AOTC for two to ten years."
www.irs.gov/credits-deductions/individuals/aotc
5:20 He explains what refundable means
Hopefully I did a good job at explaining! :)
@@OnCashFlow You did, thank you!
I have a child in junior year of high school and is in early college thru community college and h.s. I am going to claim this credit.
I would consider waiting until the student goes to University because the AOTC is worth much more when you have higher educational expenses, and community colleges are typically very inexpensive.
@@OnCashFlow how many times can you file for this? Once a year?
@@marcoperez306 You can claim this credit for a maximum of 4 years :)
Am I able to get out of the AOC? If so, how do I go about that? I started off at a community college and I didn’t pay out of pocket, fafsa covered everything. Once I transferred to university in 2017 that same semester I paid out of pocket for my classes and I have been since. So when I did my taxes today the prepare said that i reached the limit to AOC. However, my worry is I’m not done with school. Will I have to pay the IRS the following year? How can I avoid that?
You might still be able to claim the Lifetime Learning Credit (I have another video on that credit) . Whether or not you will have to pay the IRS depends on how much taxable income you have. If you're still a student and not making a significant income then you probably will pay very little in taxes. There's too much unknowns for me to give you an accurate answer with the given info.
I am on full ride at MSU. will i be qualified for this?
I already did my taxes? can i still claim it.
Maybe, I can't say for sure, I would get assistance from a tax advisor because this is a really valuable tax credit. You would have to file an amendment to your tax return, but it can be done
Is H&R Block or turbo tax easier?
I've only ever used TurboTax and it's really easy for me! :)
@@OnCashFlow I'm using turbo but it doesn't realize the grant is non taxable I'm not sure how to fix it , I meet all requirements for the credit but can't redeem it says I don't qualify
@@goodintentions8714 Hmm, I think it may be using the grant to offset qualified expenses. If it does that then it wont couint expenses towards the credit. :/
@@OnCashFlow how do I fix ? Or do I just not really qualify
@@goodintentions8714 I don't know enough info to say for sure. Double, no triple check if you qualify. It you do, then get help from a professional because the credit is worth way more than what you might pay for some help
Hello I’m very confused about this
What are you confused about, how can I try and help?
I dont owe anything on taxes, so i only get 1000$ as a refund?
Possibly. That would be the maximum refund amount for the AOTC. The IRS says
"If the credit brings the amount of tax you owe to zero, you can have 40 percent of any remaining amount of the credit (up to $1,000) refunded to you."
@@OnCashFlow I don't understand why my federal refund came up as $826 after filling out the education portion on TurboTax. I was expecting it to be $1000 (not $2,500 since my income is $0), and I added $27 for a book that I purchased for one of the courses. Not sure what I'm missing.
Not enough educational expenses perhaps?
@@OnCashFlow I noticed that on the 1098T form I was sent for 2020, the box one amount (tuition the school received) was $7,050, which was the cost for the five courses of 2020. However, box five, the scholarships or grants I received is $4,815, but that is for six courses, including a class from 2019, not just the 2020 ones. This makes it look like I received more financial help than I did for 2020, which may have affected the amount of credit I get back. Not sure why that was the case, but in the end, I didn't really care and didn't want to think about it anymore.
@@lutherevans968 Sometimes the schools will put the school year on the 1098T instead of the calendar year. There is a check box on # 7.
Wait i thought AOTC was attack of the clones
Haha it has many meanings! That one is probably more well known lol
Me an intellectual, who knows AOTC really stands for Attack of the Clones. 🙃
haha I didn't think of that!
Linus Tax Tips
huh?
huh?
All we get is credit? No actual money
The AOTC is actually refundable. From the IRS: "If the credit brings the amount of tax you owe to zero, you can have 40 percent of any remaining amount of the credit (up to $1,000) refunded to you."