First, please be aware that college room and board, or equivalent expenses paid off-campus, are not tax-deductible expenses and may not be used as any part of the basis for either of the federal educational tax credits.
Only one education credit may be claimed per year with
respect to any one student. The following guidance for the American Opportunity
Tax Credit is taken from IRS Pub. 970 Tax Benefits for
Education. Identical provisions exist for the
Lifetime Learning Credit.
"If there are qualified education expenses for your
dependent during a tax year, either you or
your dependent, but not both of you, can claim an American Opportunity
Credit for your dependent's expenses for that year.
For you to claim an American Opportunity Credit for your
dependent's expenses, you must also claim an exemption for your dependent. You
do this by listing your dependent's name and other required information on Form
1040 (or Form 1040A), line 6c.
Expenses paid by dependent. If
you claim an exemption on your tax return for an eligible student who is your
dependent, treat any expenses paid (or deemed paid) by your dependent as if you
had paid them. Include these expenses when figuring the amount of your American
Opportunity Credit.
Expenses paid by you. If
you claim an exemption for a dependent who is an eligible student, only you can
include any expenses you paid when figuring the amount of the American
Opportunity Credit. If neither you nor anyone else claims an exemption for the
dependent, only the dependent can include any expenses you paid when figuring
the American Opportunity Credit."
