Restrictions That Apply to These Credits

Taxpayers cannot claim a double-benefit. For example, taxpayers cannot:

• Deduct higher education expenses and claim a credit based on those same expenses
• Claim a American Opportunity Credit and a Lifetime Learning Credit based on the same qualified education expenses
• Claim a credit based on expenses paid with a tax-free scholarship, grant, employer-provided educational assistance or a distribution from a Coverdell ESA

In addition, qualified expenses are reduced by the amount of any tax-free educational assistance taxpayers receive. Tax-free educational assistance can include the following:

• Scholarships
• Pell grants
• Employer-provided educational assistance
• Veteran's educational assistance
• Any other nontaxable payments (other than gifts, bequests or inheritances) received for education expenses

Qualified expenses are reduced by any refunds or tax-free assistance received.