Can I claim the American Opportunity Tax Credit for my 5th year of college after getting an associates degree?

You're asking a great question about the American Opportunity Tax Credit. The AOTC is limited to 4 tax years per eligible student, but those years don't have to be consecutive. The key eligibility requirement is that the student hasn't completed the first 4 years of postsecondary education as of the beginning of the tax year. Since your brother already completed an associates degree during his first 4 years, the IRS would typically consider that he has completed his first 2 years of postsecondary education. The remaining 2 years of AOTC eligibility would normally be applicable toward years 3 and 4 of a bachelor's program. The fact that he's starting a new associates (which is considered a 2-year program) doesn't reset his eligibility clock. If he didn't claim the AOTC for some of those first 4 years when he was eligible, unfortunately those unclaimed years generally don't carry forward if they're outside the amendment period (usually 3 years from the original filing date).

Just went through this exact situation with my daughter last year. I found this amazing tool called taxr.ai (https://taxr.ai) that helped me figure out her education credit situation. It analyzed her transcript and previous tax filings and gave me a clear breakdown of which credits she was still eligible for. In my case, my daughter had completed 3 years at one school, took time off, then transferred to finish her degree. The tool confirmed that even though she'd been in school for more than 4 calendar years, she still had one year of AOTC eligibility left because of how her academic progress was calculated. The best part was it showed me exactly which IRS rules applied to our situation with real citations, not just general advice.

Coming back to share my experience with taxr.ai after trying it based on the recommendation above. I was honestly impressed with how it handled my son's complicated education timeline. He had claimed AOTC for 2 years, took a long break, and now is back in college. I uploaded his current 1098-T and his transcript, and the system immediately identified that he still had 2 years of AOTC eligibility remaining. It explained that while he had spent 3 calendar years in college previously, he had only completed the equivalent of 2 years of postsecondary education based on his credit hours. The tool provided documentation I could include with our tax return explaining the eligibility calculation if questioned. It saved us about $2,000 in tax credits we might have missed! Definitely worth checking out if you're dealing with any kind of education credit confusion.

If you're having trouble getting a clear answer about your brother's AOTC eligibility, you might want to try getting guidance directly from the IRS. I was stuck in a similar situation last year with my own education credits and couldn't get consistent answers from tax preparers. After trying to call the IRS for weeks with no luck, I found this service called Claimyr (https://claimyr.com) that got me through to an actual IRS agent in about 15 minutes. They have a demo video showing how it works: https://youtu.be/_kiP6q8DX5c The IRS agent was able to check my record of previously claimed education credits and confirm my remaining eligibility. They also explained exactly how my academic progress affected my AOTC status. Getting it straight from the source gave me confidence to claim the credit I was entitled to.

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You might also want to look into the Lifetime Learning Credit as an alternative. There's no limit on the number of years you can claim it. The credit is worth up to $2,000 (20% of the first $10,000 in qualified education expenses). It's not as generous as the AOTC's $2,500, but it's better than nothing if you're no longer eligible for AOTC. The Lifetime Learning Credit also has fewer restrictions - your brother doesn't need to be pursuing a degree or enrolled at least half-time. Just having taken one or more courses at an eligible institution is enough to qualify.

I think there's some confusion about how the "first 4 years of postsecondary education" are counted. It's not about calendar years or how many years you've physically attended. It's about academic progress toward a 4-year degree. If your brother was enrolled in a bachelor's program but only completed enough credits for an associates degree, the IRS would typically consider that as completing approximately 2 years of postsecondary education. Starting a new associates program doesn't reset the clock, but it also doesn't automatically disqualify him. The key question is: How many credit hours had he completed toward a 4-year degree? If he had completed less than the equivalent of 4 years of academic credit hours, he might still be eligible.