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According to IRS Publication 970 (2024), page 20 :
IF you...
don't claim on your tax return a dependent who is an eligible student (even if entitled to claim the dependent)Then only...
the dependent can claim the American Opportunity Credit.
You can't claim the credit based on this dependent's expenses.
This suggests the answer is yes — the dependent can claim the AOC, provided they are not actually claimed on another return.
However, in ProConnect, when I check the box that the dependent "can be claimed," the AOC is turned off for the dependent’s return.
Question:
Is this correct behavior per IRS rules, or is it a ProConnect software bug? If it's a bug, what is the best workaround?
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Yes, a person who is a dependent (but not actually claimed) can claim the American Opportunity Credit.
Does your software have another spot that asks if they actually WERE claimed? I suspect that may be what you need to look for.
However, the dependent (but not actually claimed) can usually only claim the non-refundable portion (to offset income tax, if they have any). In most cases, they won't qualify for the refundable portion (see link).
https://www.irs.gov/publications/p970#en_US_2024_publink1000211799
