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@Just-Lisa-Now- wrote:

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@BobKamman wrote:

It's still morning here but I don't think "claim of right" applies when the repayment is made in the same year as the income is received.  

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hmmm, you may be right, but she received the disability income in prior years, paid tax on it and paid it back to them in 2022 when she got the SSDI.   

I dont see a way to reduce the income for AOC, but they should be able to get the credit for the taxes paid on that money in prior years.

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That wasn't my read of the situation.  My understanding aligns with Bob's based on these two facts presented (doesn't mean the facts are right, or that the repayment went to the same entity that paid the benefits):

"I have a client that received SSDI lump sum payment in 2022"

"Paid back in 2022"

I'm assuming we're talking about a 2022 income tax return, but I'm not entirely sure of that at this point.

If these don't net on the same tax return, I agree, you may be SOL for AOC.  Good news though, most students spend (at least) 5 calendar years earning a 4-year college degree.  Fall in the first year and Spring in the fifth year.  So even if you skip an AOC along the way, just be sure to time the fifth year to pay that Spring tuition in January instead of December.  Mine stretched out to 4.5 years because I picked up an internship my senior year and didn't want a full course load on top of working part-time.  But alas, I predate the Hope credit.