Poll:Take AOTC this year or not?

[SecondCor521]

Hi all,

My question: Should I take the AOTC this year or not?

Details:

My three kids are coming up on college in the next five years or so.

My middle son is currently a junior in high school who has been accepted into and will very likely attend a summer engineering program at his first choice university this summer. The program costs $2750 or so, and it looks like the school considers that $2750 to be tuition that would qualify for AOTC.

This same child is working towards his IB diploma with about a 3.5 GPA and is wanting to be a mechanical engineer so will probably spend either 3 or more likely 4 years in college from fall 2019 through spring 2023.

According to the IRS, I can only take the AOTC for four years for each kid.

So choice A is to take the AOTC this year on the $2750 and then for his first four three years of college. I could then take the LLC for his fourth year and onward.

Choice B is to skip the AOTC this year, take it for his first four years of college, then LLC after that.

Choice C is anything else that y'all might suggest as a better plan.

The reason this matters is if I don't take the AOTC, I'll reimburse myself from his ESA for these expenses. If I do take the AOTC, I can't reimburse myself from his ESA for these expenses. If I do reimburse myself, I'd rather do so sooner than later. Thus the question now.

Advice welcome.

 

[Svensk Anga]

I say grab it now lest the rules change on you. Strange response that, given that I plan to take SS at 70.

 

[PatrickA5]

Does he meet these qualifications and still be a high school student? I doubt it. Even if he does, you won't get the full $2,500 of credit on $2,750 of expenses.

Q12. Who is an eligible student for the American opportunity tax credit?
A. For the American opportunity tax credit, an eligible student is a student who: (1) is enrolled in a program leading toward a degree, certificate or other recognized post-secondary educational credential; (2) has not completed the first four years of post-secondary education as of the beginning of the taxable year; (3) for at least one academic period is carrying at least ½ of the normal full-time work load for the course of study the student is pursuing; and (4) has not been convicted of a felony drug offense.

 

[SecondCor521]

Does he meet these qualifications and still be a high school student? I doubt it. Even if he does, you won't get the full $2,500 of credit on $2,750 of expenses.

Q12. Who is an eligible student for the American opportunity tax credit?
A. For the American opportunity tax credit, an eligible student is a student who: (1) is enrolled in a program leading toward a degree, certificate or other recognized post-secondary educational credential; (2) has not completed the first four years of post-secondary education as of the beginning of the taxable year; (3) for at least one academic period is carrying at least ½ of the normal full-time work load for the course of study the student is pursuing; and (4) has not been convicted of a felony drug offense.

The school awards 2 credit hours towards his degree if he matriculates there, so I think that he does qualify as far as criteria (1). He obviously qualifies for (2) and (4) also. (3) is the one I feel like I need to clarify with the school, but I think they would say yes. They're also saying that they have to report tuition charges for all students to the IRS, and would we please fill out a W9S form.

The part about not getting the full credit is what is giving me pause. Next year as a freshman I planned to pay $4K OOP and then the rest from his ESA/529 and take the full AOTC credit.

 

[PatrickA5]

Is he enrolled in a degree program? When my kid went to college during high school, they wouldn't let him enroll in a degree program until he finished high school. He took classes that would later count towards his degree, but he wasn't officially enrolled in a degree program.

I don't recall getting a 1098T, but it will be interesting if taking one Summer course will be coded on a 1098T as being half time.

I think I'd wait and get the full AOTC regardless. As you are contemplating, I pay $4k out of pocket during one semester. Everything else comes out of his 529.

 

[SecondCor521]

^Well, it's ambiguous. He'd be enrolled in a summer program, and as I mentioned above, if he completes the summer program successfully and matriculates at that school, they would give him two credits towards his degree there.

I suspect, based on the way the school has worded things, that they are going to send me a 1098T with $2750 in box 1. I don't know what they'll do with box 8; I suppose it only matters if I decide to take the AOTC. Right now I'm leaning against it.

 

[Texas Proud]

When I went to college a full load was a minimum of 12 hours... so that would mean 6 hours for a semester... we had 2 summer semesters that counted as 1 normal semester....

I do not think he would qualify as part time....

I also do not think he is in a degree program.... that is a specific program and any of the coursed around here that is college credits in high school are just the basic courses and they do not allow you into a degree program...