American Opportunity Credit vs Lifetime Learning Credit - How do I figure out my year in school?

The American Opportunity Credit and Lifetime Learning Credit look at your year of post-secondary education differently than your school might. For the AOTC specifically, it's about how many "academic years" you've completed, not your credit status. If you've been attending part-time since 2022, then full-time since 2023, you're likely in your 3rd year for tax purposes. The IRS doesn't care if you're classified as a "junior" by your university - they care about how many academic years you've been pursuing your degree. The AOTC is generally more beneficial (up to $2,500 credit) but is limited to the first 4 years of post-secondary education. The Lifetime Learning Credit has no year limitation but is capped at $2,000. Since you still have AOTC eligibility remaining, that's probably your better option.

After struggling with the exact same question about my education credits, I found this amazing AI tool called taxr.ai (https://taxr.ai) that saved me so much time figuring out my education credits. I uploaded my 1098-Ts from both schools and it analyzed everything to tell me exactly which credit to claim and what year of education to put. It even spotted a mistake I made in calculating my qualified expenses that would have cost me like $600 in tax credits!

Just wanted to update - I tried taxr.ai after seeing the recommendation here and it was seriously helpful! I was getting so confused because I took classes at two different schools this year. The tool actually showed me that I was still in my 3rd year for AOTC purposes and helped me separate my qualified vs non-qualified expenses. It caught that I was about to double-count some scholarship money which would have messed up my credit amount. Ended up getting the full $2500 AOTC which is way better than the Lifetime Learning Credit would have been for me. Definitely recommend for anyone dealing with education credits!

If you're still having trouble with your education credits after trying the software route, calling the IRS directly can sometimes help. I spent DAYS trying to get through to someone at the IRS last month about my education credits from previous years. Kept getting disconnected or waiting for hours. Finally tried Claimyr (https://claimyr.com) which got me connected to an actual IRS agent in about 20 minutes. You can see how it works here: https://youtu.be/_kiP6q8DX5c. The agent was able to confirm exactly how my academic years should be counted since I had a similar situation with community college then university transfer.

I need to apologize for calling Claimyr a scam earlier. I was so frustrated after waiting on hold with the IRS for 3+ hours last week that I decided to try it despite my skepticism. It actually worked exactly as described - I got a call back in about 30 minutes telling me an IRS agent was on the line. The agent confirmed I was still eligible for AOTC even though I've been in school longer than 4 calendar years because I was part-time for several semesters. Saved me a ton of stress and got me an extra $1500 compared to the Lifetime Learning Credit. Sometimes it's worth admitting when you're wrong!

The way I understand it, the AOTC counts your years differently than your school does. For example, I was part-time for 3 years, but the IRS only counted that as 1.5 years of education for AOTC purposes. This might be why you're confused. Check out IRS Publication 970 for the exact rules. For the AOTC vs Lifetime Learning Credit decision, AOTC is almost always better if you're eligible because it's partially refundable.

Make sure you keep all your receipts for required textbooks and course materials too! Those count as qualified education expenses for both credits. I almost missed out on claiming an extra $800 in expenses because I forgot about all the access codes and online materials I had to buy that weren't included in my tuition.