Q. Can i take both the Amer Opp Credit (AOC) and Ibond interest exclusion in same year if i have about $3000 in college tuition for my daughter?
A. No. It would be double dipping to count the same $3000 of qualified expenses for two tax breaks.
But, there is a loop hole available. Use the $3000 tuition to claim the AOC.
Roll over the cashed savings bond to a 529 plan. This must be done within 60 days of cashing the bond. Later, take a 529 distribution (withdrawal) to reimburse yourself for other educational expenses, including room & board (if student is half time or more).
Reference: https://www.savingforcollege.com/article/how-to-rollover-us-savings-bonds-into-a-529-plan#:~:text=In....
Instead, you could split the $3000; $2000 to AOC and $1000 to the bond. The AOC is 100% of the first $2000 of expenses (tuition) and 25% on the 2nd $2000. Only the bond interest (Not the whole bond amount) is excludable, so you have to do the math to see which way is best. Usually the first $4000 of expenses should be used for the AOC.
