My daughter goes to a university and, as part of her course work, has to do clinical work at a local hospital. If we buy her a car, can we treat it as a qualified educational expense for purposes of the American Opportunity credit?

My daughter goes to a university and, as part of her course work, has to do clinical work at a local hospital. If we buy her a car, can we treat it as a qualified educational expense for purposes of the American Opportunity credit?

Probably not. The American Opportunity credit allows taxpayers to claim a tax credit of 100% of the first $2,000 of qualified expenses, plus 25% of the next $2,000 of qualified expenses, for a maximum credit of $2,500. The credit can be claimed for the first 4 years of higher education by the taxpayer, the taxpayer's spouse, or the taxpayer's dependent, provided the taxpayer's modified adjusted gross income does not exceed set limits.

Qualified educational costs include only qualified tuition and "related expenses." The term related expenses means course materials (books, supplies, and equipment needed for a course of study, whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance). Whether a computer would fit this definition depends on the circumstances. However, it would seem to be a stretch to make a car fit this definition.