If I paid college expenses from 529 plan , can I still deduct them and be eligible for scholarship?

[HelenaC]

Yes, you may be able to. The AOTC may be claimed in the same year that a tax-free distribution is made as long as the same expenses are not used to calculate the tax-free distribution AND the American Opportunity Tax Credit. You must remove from your total Qualified Higher Education Expenses (QHEE) any of the tuition expense that you used to qualify for the AOTC. If you claim a $2,500 American Opportunity credit on a federal tax return, you cannot include the $4,000 in tuition and related educational expenses that were used to support the credit.

The IRS disallows “double-dipping” or utilizing more than one tax benefit for the same educational expenses. Parents who claim the AOTC for themselves or their child may not receive the full tax exclusion on 529 funds used to pay for college.

For additional information, click on Can I use the same education expense to calculate both an education credit and taxability of 529 or ...

Related Information:

• What are 529 plans?
• Can I deduct contributions to a 529 plan?
• How do I enter Form 1098-T?
• Where do I enter a 1099-Q?