I’m curious how often this happens. I have a client who went back to school years after getting their bachelor’s degree. They’ve never claimed any educational credits before. What are the chances the IRS will deny the credit?
Thanks in advance for any input!
The American Opportunity Tax Credit (AOTC) can only be used during the first four years of higher education, so your client wouldn’t qualify for it.
The Lifetime Learning Credit doesn’t have that restriction, as long as they went to an eligible school.
Dru said:
@Tyler
Does higher education mean undergrad or grad school?
AOTC isn’t available for any year after they’ve completed their bachelor’s degree.
Dru said:
@Tyler
Does higher education mean undergrad or grad school?
Are you asking if higher education includes grad school?
Dru said:
@Tyler
Does higher education mean undergrad or grad school?
Are you asking if higher education includes grad school?
Yeah, sorry for not being clear. 
@Dru
No problem! Higher education means anything after high school, so it includes both undergrad and graduate school.
Since they already have a bachelor’s, they wouldn’t qualify for AOTC anymore.
Tyler said:
@Dru
No problem! Higher education means anything after high school, so it includes both undergrad and graduate school.
Since they already have a bachelor’s, they wouldn’t qualify for AOTC anymore.
Even if they didn’t claim it during their undergrad years?
@Dru
Correct. It doesn’t matter if they didn’t use it before. They might still be eligible for the Lifetime Learning Credit, though it’s not as generous.
It’s pretty common for the IRS to disallow education credits if the rules aren’t followed. They’ve gotten stricter over time. When the credit first came out, people abused it to get the refundable $1,000. Scammers would claim they went to college when they didn’t, and some even filed for dead relatives or babies. The IRS now verifies with 1098 forms, among other checks.
I once saw a case where a woman claimed the credit for herself and five kids under 10, trying to scam $6,000. She did it for multiple years before getting caught.
It depends on which credit you’re trying to claim.
Florian said:
It depends on which credit you’re trying to claim.
We’re looking at the Opportunity Tax Credit and the Lifetime Learning Credit.
Florian said:
It depends on which credit you’re trying to claim.
We’re looking at the Opportunity Tax Credit and the Lifetime Learning Credit.
If they already have a bachelor’s degree, they’re not eligible for AOTC.
Thanks, everyone! Appreciate the quick responses.
The IRS gets the 1098-T form, which includes a box showing if the student is a graduate. If that box is checked, they’ll know the taxpayer doesn’t qualify for the AOTC. They’ll send an audit letter after processing the return and ask for the refundable credit to be paid back.