Page 12

For 2022, treat an academic period beginning in the first 3 months of 2023 as if it began in 2022 if qualified education expenses for the student were paid in 2022 for that academic period. See Prepaid expenses, later. 4. As of the end of 2022, the student had not been con- victed of a federal or state felony for possessing or distributing a controlled substance. Example 1. Sharon was eligible for the American op- portunity credit for 2016, 2017, 2019, and 2021. Sharon’s parents claimed the American opportunity credit for Sharon on their 2016, 2017, and 2019 tax returns. Sharon claimed the American opportunity credit on her 2021 tax return. The American opportunity credit has been claimed for Sharon for 4 tax years before 2022. Therefore, the American opportunity credit can't be claimed for Sharon for 2022. If Sharon were to file Form 8863 for 2022, the box on Part III, line 23, should be checked “Yes” and only the lifetime learning credit would be able to be claimed. Example 2. Wilbert was eligible for the American op- portunity credit for 2018, 2019, 2020, and 2022. Wilbert’s parents claimed the American opportunity credit for Wil- bert on their tax returns for 2018, 2019, and 2020. No one claimed an American opportunity credit for Wilbert for any other tax year. The American opportunity credit has been claimed for Wilbert for only 3 tax years before 2022. Therefore, Wilbert meets the second requirement to be el- igible for the American opportunity credit. If Wilbert were to file Form 8863 for 2022, the box on Part III, line 23, should be checked “No.” If Wilbert meets all of the other requirements, he is eligible for the American opportunity credit. Example 3. Glenda enrolls on a full-time basis in a de- gree program for the 2023 spring semester, which begins in January 2023. Glenda pays the tuition for the 2023 spring semester in December 2022. Because the tuition Glenda paid in 2022 relates to an academic period that begins in the first 3 months of 2023, the eligibility to claim an American opportunity credit in 2022 is determined as if the 2023 spring semester began in 2022. Therefore, Glenda satisfies this third requirement. If the requirements above aren't met for any stu- dent, 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 de- fined 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 re- turn. TIP Who Can't Claim the Credit? You can't claim the American opportunity credit for 2022 if any of the following apply. • Your filing status is married filing separately. • You are claimed as a dependent on another person's tax return, such as your parent's return. See Who Can Claim a Dependent's Expenses, later. • Your modified adjusted gross income (MAGI) is $90,000 or more ($180,000 or more if married filing jointly). MAGI is explained later under Effect of the Amount of Your Income on the Amount of Your Credit. • You (or your spouse) were a nonresident alien for any part of 2022 and the nonresident alien didn't elect to be treated as a resident alien for tax purposes. More information on nonresident aliens can be found in Pub. 519, U.S. Tax Guide for Aliens. • You weren’t issued an SSN (or ITIN) by the due date of your 2022 return (including extensions). You can't claim the American opportunity credit on either your original or an amended 2022 return. Also, you can't claim this credit on your original or an amended 2022 return for a student who wasn’t issued an SSN, ATIN, or ITIN by the due date of your return (including exten- sions). If an ATIN or ITIN is applied for on or before the due date of a 2022 return (including extensions) and the IRS issues an ATIN or ITIN as a result of the application, the IRS will consider the ATIN or ITIN as issued on or before the due date of the return. What Expenses Qualify? The American opportunity credit is based on adjusted qualified education expenses you pay for yourself, your spouse, or a dependent you claim on your tax return. Gen- erally, the credit is allowed for adjusted qualified educa- tion expenses paid in 2022 for an academic period begin- ning in 2022 or beginning in the first 3 months of 2023. For example, if you paid $1,500 in December 2022 for qualified tuition for the spring 2023 semester beginning January 2023, you can use that $1,500 in figuring your 2022 credit. Academic period. An academic period includes a se- mester, trimester, quarter, or other period of study (such as a summer school session) as reasonably determined by an educational institution. If an educational institution uses credit hours or clock hours and doesn't have aca- demic terms, each payment period can be treated as an academic period. Paid with borrowed funds. You can claim an American opportunity credit for qualified education expenses paid with the proceeds of a loan. Use the expenses to figure the American opportunity credit for the year in which the expenses are paid, not the year in which the loan is Page 12 Chapter 2 American Opportunity Credit