Can you clarify if the $160k income you mentioned is taxable income or AGI? The limit for married filing jointly is $180k of MAGI.
The education credits are limited using AGI as a starting point, not taxable income. The education credits are based on modified adjusted income ("MAGI"), which starts with Line 11, AGI, and has several modifications. Here is the chart to figure MAGI for the American Opportunity Credit: Worksheet 2-1. MAGI for the American Opportunity Credit
