Q. Does that mean I am not eligible for the American Opportunity Education Tax Credit (AOTC) for her?
A. Simple answer: yes.
But taxes aren't simple. What it means is: you can't "double dip". You can't use the same expenses to claim both the AOTC and the Coverdell ESA to be tax free. For most people, it is better to claim the AOTC, even if you need to pay a little tax on the ESA. The 10% penalty (but not the tax) is waived in that situation.
