Question

A taxpayer can claim an American Opportunity Credit or Lifetime Learning Credit in the same year that the taxpayer excludes an ESA (Educational Savings Account) or QTP (Qualified Tuition Program) from income as long as the same educational expenses are used for both benefits.

True

False

Answer 1

Solution: False

Explanation: A taxpayer is allowed to claim an American Opportunity Credit or Lifetime Learning Credit in the same year if the beneficiary takes a tax-free distribution from a Coverdell ESA, and the same expenditures are not utilized for both the benefits. Thus it states that tax payer must reduce qualified higher education expenses by tax-free educational assistance, and further decrease reduce it by an expenditure taken into account in computing an American opportunity or lifetime learning credit