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IRS.gov Website
Publication 970
taxmap/pubs/p970-003.htm#en_us_publink1000204308

Chapter 2
American Opportunity Credit(p9)


Reminders(p9)

rule
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Educational institution's EIN required.(p9)
To claim the American opportunity credit, you must provide the educational institution's employer identification number (EIN) on your Form 8863. You should be able to obtain this information from Form 1098-T or the educational institution.
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Form 8862 may be required.(p9)
If your American opportunity credit was denied or reduced for any reason other than a math or clerical error for any tax year beginning after 2015, you must attach a completed Form 8862, Information To Claim Certain Refundable Credits After Disallowance, to your tax return for the next year for which you claim the credit. See Form 8862 and its instructions for details.
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Form 1098-T requirement.(p9)
To be eligible to claim the American opportunity credit, the law requires a taxpayer (or a dependent) to have received Form 1098-T, Tuition Statement, from an eligible educational institution, whether domestic or foreign.
However, you may claim the credit if the student doesn't receive a Form 1098-T because the student's educational institution isn't required to furnish a Form 1098-T to the student under existing rules (for example, if the student is a qualified nonresident alien, has qualified education expenses paid entirely with scholarships, has qualified education expenses paid under a formal billing arrangement, or is enrolled in courses for which no academic credit is awarded). If a student's educational institution isn't required to provide a Form 1098-T to the student, you may claim the credit without a Form 1098-T if you otherwise qualify, can demonstrate that you (or a dependent) were enrolled at an eligible educational institution, and can substantiate the payment of qualified tuition and related expenses.
You may also claim a credit if the student attended an eligible educational institution required to furnish Form 1098-T but the student doesn't receive Form 1098-T before you file your tax return (for example, if the institution otherwise required to furnish the Form 1098-T doesn't furnish it or refuses to do so) and you take the following required steps. After January 31, 2019, but before the due date for your 2018 tax return, you or the student must request that the educational institution furnish a Form 1098-T. You must fully cooperate with the educational institution's efforts to gather the information needed to furnish the Form 1098-T. You must also otherwise qualify for the benefit, be able to demonstrate that you (or a dependent) were enrolled at an eligible educational institution, and substantiate the payment of qualified tuition and related expenses.
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Ban on claiming the American opportunity credit.(p9)
If you claim the American opportunity credit even though you're not eligible, you may be banned from claiming the credit for 2 or 10 years depending on your conduct. See Caution under Introduction.
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Taxpayer identification number (TIN) needed by due date of return.(p9)
If you haven't been issued a TIN by the due date of your 2018 return (including extensions), you can't claim the American opportunity credit on either your original or an amended 2018 return. Also, the American opportunity credit isn't allowed on either your original or an amended 2018 return for a student who hasn't been issued a TIN by the due date of your return (including extensions).

taxmap/pubs/p970-003.htm#en_us_publink1000273661Introduction

For 2018, there are two tax credits available to help you offset the costs of higher education by reducing the amount of your income tax. They are the American opportunity credit (this chapter) and the lifetime learning credit (chapter 3).
This chapter explains:
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What is the tax benefit of the American opportunity credit?(p9)

rule
For 2018, you may be able to claim a credit of up to $2,500 for adjusted qualified education expenses paid for each student who qualifies for the American opportunity credit.
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. Forty percent of the American opportunity credit may be refundable. This means that if the refundable portion of your credit is more than your tax, the excess will be refunded to you.
Your allowable American opportunity credit may be limited by the amount of your income. Also, the nonrefundable part of the credit may be limited by the amount of your tax.
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Overview of the American opportunity credit for 2018.(p9)

rule
See Table 2-1 for the basics of this credit. The details are discussed in this chapter.
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Can you claim more than one education credit this year?(p9)

rule
For each student, you can elect for any year only one of the credits. For example, if you elect to claim the American opportunity credit for a dependent on your 2018 tax return, you can't use that same dependent's qualified education expenses to figure the lifetime learning credit for 2018.
If you pay qualified education expenses for more than one student in the same year, you can choose to claim the American opportunity credit on a per-student, per-year basis. If you pay qualified education expenses for a student (or students) for whom you don't claim the American opportunity credit, you can use the adjusted qualified education expenses of that student (or those students) in figuring your lifetime learning credit. This means that, for example, you can claim the American opportunity credit for one student and the lifetime learning credit for another student in the same year.
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Differences between the American opportunity and lifetime learning credits.(p10)

rule
There are several differences between these two credits. For example, you can claim the American opportunity credit based on the same student's expenses for no more than 4 tax years, which includes any tax years you claimed the Hope scholarship credit for that student. However, there is no limit on the number of years for which you can claim a lifetime learning credit based on the same student's expenses. The differences between these credits are shown in Appendix B near the end of this publication.
Deposit
If you claim the American opportunity credit for any student, you can choose between using that student's adjusted qualified education expenses for the American opportunity credit or the lifetime learning credit. If you have the choice, the American opportunity credit will always be greater than the lifetime learning credit.
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Form 8862 may be required.(p10)

rule
If your American opportunity credit was denied or reduced for any reason other than a math or clerical error for any tax year beginning after 2015, you must attach a completed Form 8862, Information To Claim Certain Refundable Credits After Disallowance, to your tax return for the next tax year for which you claim the credit. See Form 8862 and its instructions for details.
EIC
Don't claim the American opportunity credit for 2 years after there was a final determination that your claim was due to reckless or intentional disregard of the rules, or 10 years after there was a final determination that your claim was due to fraud.
Table 2-1. Overview of the American Opportunity Credit for 2018
Maximum credit Up to $2,500 credit per eligible student
Limit on modified adjusted gross income (MAGI) $180,000 if married filing jointly; $90,000 if single, head of household, or qualifying widow(er)
Refundable or nonrefundable 40% of credit may be refundable; the rest is nonrefundable
Number of years of postsecondary education Available ONLY if the student had not completed the first 4 years of postsecondary education before 2018 (generally, the freshman through senior years, determined by the eligible educational institution, not including academic credit awarded solely because of the student's performance on proficiency examinations)
Number of tax years credit available Available ONLY for 4 tax years per eligible student (including any year(s) Hope scholarship credit was claimed)
Type of program required Student must be pursuing a program leading to a degree or other recognized education credential
Number of courses Student must be enrolled at least half-time for at least one academic period that begins during 2018 (or the first 3 months of 2019 if the qualified expenses were paid in 2018)
Felony drug conviction As of the end of 2018, the student had not been convicted of a felony for possessing or distributing a controlled substance
Qualified expenses Tuition, required enrollment fees, and course materials that the student needs for a course of study whether or not the materials are bought at the educational institution as a condition of enrollment or attendance
Payments for academic periods Payments made in 2018 for academic periods beginning in 2018 or beginning in the first 3 months of 2019
TIN needed by filing due dateFilers and students must have been issued a TIN by the due date of their 2018 return (including extensions)
Educational institution’s EINYou must provide the educational institution's employer identification number (EIN) on your Form 8863
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Can You Claim the Credit?(p11)

rule
The following rules will help you determine if you are eligible to claim the American opportunity credit on your tax return.
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Who Can Claim the Credit?(p11)

rule
Generally, you can claim the American opportunity credit if all three of the following requirements are met.
Note.Qualified education expenses paid by a dependent you claim on your tax return, or by a third party for that dependent, are considered paid by you.
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Student qualifications.(p11)

rule
Generally, you can claim the American opportunity credit for a student only if all of the following four requirements are met.
  1. As of the beginning of 2018, the student had not completed the first 4 years of postsecondary education (generally, the freshman through senior years of college), as determined by the eligible educational institution. For this purpose, don't include academic credit awarded solely because of the student's performance on proficiency examinations.
  2. Neither the American opportunity credit nor the Hope scholarship credit has been claimed by you or anyone else (see below) for this student for any 4 tax years before 2018. If the American opportunity credit (and Hope scholarship credit) has been claimed for this student for any 3 or fewer tax years before 2018, this requirement is met.
  3. For at least one academic period beginning (or treated as beginning) in 2018, the student both:
    1. Was enrolled in a program that leads to a degree, certificate, or other recognized educational credential; and
    2. Carried at least one-half the normal full-time workload for his or her course of study.The standard for what is half of the normal full-time workload is determined by each eligible educational institution. However, the standard may not be lower than any of those established by the U.S. Department of Education under the Higher Education Act of 1965.
      For 2018, treat an academic period beginning in the first 3 months of 2019 as if it began in 2018 if qualified education expenses for the student were paid in 2018 for that academic period. See Prepaid expenses, later.
  4. As of the end of 2018, the student had not been convicted of a federal or state felony for possessing or distributing a controlled substance.
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Example 1.(p12)

Sharon was never eligible for the Hope scholarship credit (available before 2009) but was eligible for the American opportunity credit for 2012, 2013, 2015, and 2017. Her parents claimed the American opportunity credit for Sharon on their 2012, 2013, and 2015 tax returns. Sharon claimed the American opportunity credit on her 2017 tax return. The American opportunity credit and Hope scholarship credit have been claimed for Sharon for 4 tax years before 2018. Therefore, the American opportunity credit can't be claimed for Sharon for 2018. If Sharon were to file Form 8863 for 2018, she would check "Yes" for Part III, line 23, and would be eligible to claim only the lifetime learning credit.
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Example 2.(p12)

Wilbert was eligible for the American opportunity credit for 2014, 2015, 2016, and 2018. His parents claimed the American opportunity credit for Wilbert on their tax returns for 2014, 2015, and 2016. No one claimed an American opportunity credit or Hope scholarship credit for Wilbert for any other tax year. The American opportunity credit and Hope scholarship credit have been claimed for Wilbert for only 3 tax years before 2018. Therefore, Wilbert meets the second requirement to be eligible for the American opportunity credit. If Wilbert were to file Form 8863 for 2018, he would check "No" for Part III, line 23. If Wilbert meets all of the other requirements, he is eligible for the American opportunity credit.
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Example 3.(p12)

Glenda enrolls on a full-time basis in a degree program for the 2019 spring semester, which begins in January 2019. Glenda pays her tuition for the 2019 spring semester in December 2018. Because the tuition Glenda paid in 2018 relates to an academic period that begins in the first 3 months of 2019, her eligibility to claim an American opportunity credit in 2018 is determined as if the 2019 spring semester began in 2018. Therefore, Glenda satisfies this third requirement.
Deposit
If the requirements above aren't met for any student, you can't claim the American opportunity credit for that student. You may be able to claim the lifetime learning credit for part or all of that student's qualified education expenses instead.
"Qualified education expenses" are defined later under Qualified Education Expenses. "Eligible students" are defined later under Who Is an Eligible Student. A dependent you claim on your tax return is defined later under Who Can Claim a Dependent's Expenses.
You may find Figure 2-1 helpful in determining if you can claim an American opportunity credit on your tax return.
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taxmap/pubs/p970-003.htm#en_us_publink1000236169
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Who Can't Claim the Credit?(p12)

rule
You can't claim the American opportunity credit for 2018 if any of the following apply.