Join Early Retirement Today
View Poll Results: Should I take the AOTC this year or not?
Yes, take AOTC this year. 1 14.29%
No, skip AOTC this year. 1 14.29%
Other, I like bacon, etc. Please explain. 5 71.43%
Voters: 7. You may not vote on this poll

Reply
 
Thread Tools Search this Thread Display Modes
Poll:Take AOTC this year or not?
Old 05-07-2018, 03:36 PM   #1
Thinks s/he gets paid by the post
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 3,725
Poll:Take AOTC this year or not?

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.
__________________

__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is online now   Reply With Quote
Join the #1 Early Retirement and Financial Independence Forum Today - It's Totally Free!

Are you planning to be financially independent as early as possible so you can live life on your own terms? Discuss successful investing strategies, asset allocation models, tax strategies and other related topics in our online forum community. Our members range from young folks just starting their journey to financial independence, military retirees and even multimillionaires. No matter where you fit in you'll find that Early-Retirement.org is a great community to join. Best of all it's totally FREE!

You are currently viewing our boards as a guest so you have limited access to our community. Please take the time to register and you will gain a lot of great new features including; the ability to participate in discussions, network with our members, see fewer ads, upload photographs, create a retirement blog, send private messages and so much, much more!

Old 05-07-2018, 04:19 PM   #2
Recycles dryer sheets
 
Join Date: Dec 2012
Posts: 85
I say grab it now lest the rules change on you. Strange response that, given that I plan to take SS at 70.
__________________

Svensk Anga is offline   Reply With Quote
Old 05-07-2018, 07:58 PM   #3
Full time employment: Posting here.
 
Join Date: Nov 2006
Posts: 559
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 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.
PatrickA5 is offline   Reply With Quote
Old 05-07-2018, 09:55 PM   #4
Thinks s/he gets paid by the post
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 3,725
Quote:
Originally Posted by PatrickA5 View Post
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 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.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is online now   Reply With Quote
Old 05-07-2018, 10:23 PM   #5
Full time employment: Posting here.
 
Join Date: Nov 2006
Posts: 559
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.
PatrickA5 is offline   Reply With Quote
Old 05-07-2018, 10:33 PM   #6
Thinks s/he gets paid by the post
SecondCor521's Avatar
 
Join Date: Jun 2006
Location: Boise
Posts: 3,725
^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.
__________________
"At times the world can seem an unfriendly and sinister place, but believe us when we say there is much more good in it than bad. All you have to do is look hard enough, and what might seem to be a series of unfortunate events, may in fact be the first steps of a journey." Violet Baudelaire.
SecondCor521 is online now   Reply With Quote
Old 05-07-2018, 11:23 PM   #7
Give me a museum and I'll fill it. (Picasso)
Give me a forum ...
 
Join Date: May 2005
Posts: 15,302
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...
__________________

Texas Proud is offline   Reply With Quote
Reply


Currently Active Users Viewing This Thread: 1 (0 members and 1 guests)
 
Thread Tools Search this Thread
Search this Thread:

Advanced Search
Display Modes

Posting Rules
You may not post new threads
You may not post replies
You may not post attachments
You may not edit your posts

BB code is On
Smilies are On
[IMG] code is On
HTML code is Off
Trackbacks are Off
Pingbacks are Off
Refbacks are Off


Similar Threads
Thread Thread Starter Forum Replies Last Post
Survivor Benefit Plan-to take or not to take? aknowhow78 FIRE and Money 38 03-18-2017 12:20 AM
Take A Hit on IRA For a One Year Break? mikex FIRE and Money 16 05-13-2007 07:11 PM
Poll: How long did it take you to save for FIRE RedHawk FIRE and Money 31 01-24-2007 03:19 PM
Take a year and learn Chinese WRBT Life after FIRE 11 11-06-2006 08:06 PM
Too much income to take Social Security this year Elderdude FIRE and Money 7 10-02-2006 06:00 PM

» Quick Links

 
All times are GMT -6. The time now is 07:31 PM.
 
Powered by vBulletin® Version 3.8.8 Beta 1
Copyright ©2000 - 2019, vBulletin Solutions, Inc.
×