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On the Student Information Worksheet, there is the question:

Did the student complete the first 4 years of postsecondary education as of 1/1/2013?

If I take this question literally, the answer is no because I graduated from college in 3 years. But if I take it to mean "Did I complete a Bachelor's degree?", then the answer is yes.

Should this question be interpreted literally?

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The credits are only good for a specific number of years. They are trying to determine if you still have years left to use. –  mhoran_psprep Apr 5 at 19:29
    
Can you clarify what the "Student information worksheet" is? Is this a form given to you by your school, or is it an actual IRS form, and if so, what is the number? –  BrenBarn Apr 5 at 19:38
    
@BrenBarn, it is in the instructions for Form 1040. –  merlin2011 Apr 5 at 19:41
    
@merlin2011: I'm not seeing anything called "Student Information Worksheet" there, can you provide a link/page number? –  BrenBarn Apr 5 at 19:45
    
@BrenBarn, I do not have my physical copy with me, and I cannot seem to find it again online. The version I was just looking at, however, is generated by TurboTax. –  merlin2011 Apr 5 at 21:43

2 Answers 2

up vote 4 down vote accepted

This is an interesting question and I can't find any definitive statement. See discussion here, here and here. Those last two posts are saying that TurboTax directs people to mark "no" for this question even if they have completed four years, as long as they have not yet finished their degree (the opposite of your situation --- those who take more than 4 years to graduate).

My gut feeling is that the key is in Publication 970 (emphasis added):

the student had not completed the first four years of postsecondary education (generally, the freshman through senior years of college), as determined by the eligible educational institution

That suggests that what matters is not actual revolutions around the sun, but the number of years' worth of education completed. On that theory, even if you graduated in 3 years, you still completed the first 4 years of education. Your school at some point probably classified you as a "senior" by number of units completed. (This is also consistent with the TurboTax discussions above.)

To be on the safe side, I would mark "Yes". If you're not going to actually try to claim a tax benefit that would require you to mark "no" (like the American Opportunity Credit), it probably doesn't matter much how you tick this box. If you are going to attempt to claim such a credit, you should get solid guidance from a tax professional to make sure that's on the up-and-up.

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I disagree. It never says completion of the degree matters, even though that would be easier to say. –  NL7 Apr 6 at 0:31
    
The statutory history of IRC §§ 25A(b) and (i) clearly indicates that this a literal application of years. law.cornell.edu/uscode/text/26/25A. Please don't cheat people out of tax credits by citing a "gut feeling." –  NL7 Apr 6 at 3:47
    
@NL7: I could certainly believe a literal interpretation makes sense, but I don't see how that citation clarifies that. The fact that degree conferral is not mentioned is suggestive, but no more so than the qualification that the years are "determined by the educational institution". Colleges don't determine when calendar years begin and end. If there is something for the college to determine, that suggests it's not as simple as just calendar years. I would love to see a citation that specifically states "4 calendar years" or "4 academic September-June years" or the like. –  BrenBarn Apr 6 at 4:47
    
The statute shows that the original credit was 2 years and the AOC literally just changed 2 to 4 with no reference to completing a degree. I would say the natural way to read the "determined by..." language is that it refers to whether the student has completed studies for that year, rather than whether an accelerated credit-hour schedule can turn 3 years into 4 years. –  NL7 Apr 6 at 5:20
    
@NL7: Please note, I am not saying that degree completion is the criterion here. For instance, a 5-year bachelor's/masters program might still have a system for determining what year in the program you're in based on your completed units. You could have taken 3 academic years to complete 4 years' worth of a 5-year program and still not have your degree. The point is, the IRS publication says that "years" are determined by the school. I agree that language is ambiguous, but I don't see any clarification anywhere on that. –  BrenBarn Apr 6 at 5:24

EDIT - The statutory construction and history clearly points to a literal definition.

Yes, I would interpret it literally. If you completed your bachelor in three years, then that was only three tax years in which you claimed the American Opportunity Credit. However, note that if you are claiming it for a fourth tax year, it must be for credit toward a degree (or similar credential).

Publication 970 repeatedly states the issue as "first four years." It never lists graduation or completion of the degree as the termination of the credit. It would be very easy for them to write somewhere in Pub 970 or in the Form 8863 instructions that completion of a bachelor degree ended eligibility for subsequent years. Take their words literally.

But again, note that you must otherwise qualify: expenses from a degree program, no drug felonies, at least half-time, and so forth.

EDIT continued - Please look to IRC § 25A(b)(2)(C) and § 25A(i)(2). The Hope credit was good for only two years. The American Opportunity Credit, passed as part of the stimulus/ARRA, points to the Hope credit 2-year limit but changes it to 4 years. No mention of degrees conferred or of moving into a different program. Please do not leave credits on the table.

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