Assalamualaikum ustadh, in surah mulk it says Allah is in the heavens, but I also heard Allah is above the heavens. Which one is correct? may allah bless you.

The word "fi" in Arabic can mean "in" or "upon," depending on the context. This is common in many languages, including English. For example, you say, "I'm in the car," meaning you are inside the vehicle. But when you are inside a bus, you say, "I am on the bus," despite the fact that "on" usually means something is upon another thing (like saying, "the phone is on the table"). This type of usage happens regularly in languages. Just like Allah subhanahu wa ta'ala mentioned in the Qur'an in Surah Al-Isra: "And do not walk in (meaning upon) the earth with arrogance." The word used in the ayah is "fi." When it says "do not walk fi the earth," it doesn't mean that you are cutting through the earth and walking inside of it; it means you are walking on it. The same principle applies to the ayah regarding Allah being in the heavens; it means Allah subhanahu wa ta'ala is above the heavens and the Arabs understand this, and it is not problematic for them.