Can a parent claim the American Opportunity Credit?
The American Opportunity Credit (AOC) is a tax credit designed to help families offset the costs of higher education. This credit is particularly beneficial for parents who are paying for their children’s college expenses. However, many parents are unsure whether they are eligible to claim this credit. In this article, we will explore the eligibility criteria for parents to claim the American Opportunity Credit and provide guidance on how to do so.
The American Opportunity Credit is available to taxpayers who pay qualified education expenses for themselves, their spouse, or a dependent. For parents, this means that they can claim the credit for their children who are enrolled in an eligible educational institution. To be eligible, the student must be pursuing a degree or other recognized educational credential and must be enrolled at least half-time for at least one academic period during the tax year.
Firstly, it is essential to determine if the student meets the age requirement. The AOC is only available for students who are under the age of 25 at the end of the tax year. However, there is an exception for students who are disabled or have been disabled since the age of 24. In such cases, the student can be of any age and still qualify for the credit.
Next, the parent must be able to claim the student as a dependent on their tax return. This means that the student must meet certain relationship, residence, and support criteria. If the student is claimed as a dependent, the parent can then proceed to claim the AOC.
To claim the American Opportunity Credit, parents must complete Form 8863, Education Credits, and attach it to their tax return. They must also include the student’s Social Security number and the name of the educational institution they are attending. Additionally, parents must provide information about the qualified education expenses paid during the tax year, such as tuition, fees, books, and supplies.
It is important to note that the American Opportunity Credit is a non-refundable credit, which means that the amount of the credit can only reduce the tax liability to zero. Any remaining credit cannot be refunded but may be carried forward to future tax years.
In conclusion, parents can claim the American Opportunity Credit for their children if the student meets the age, enrollment, and dependency requirements. By understanding the eligibility criteria and completing the necessary forms, parents can take advantage of this valuable tax credit to help offset the costs of higher education. It is always recommended to consult with a tax professional or refer to the IRS guidelines for more detailed information and assistance.
