Question 1

Can I claim the AOTC if I used a 529 to pay for college?

Accepted Answer

Yes — as long as the specific expenses you claim for the AOTC weren't also paid with a tax-free 529 distribution. You can't count the same dollar twice. The standard move is to pay about $4,000 of tuition, fees, and books with cash and use the 529 for room and board and the remaining tuition.

Question 2

How much should I pay out of pocket to get the full AOTC?

Accepted Answer

About $4,000 of AOTC-qualified expenses — tuition, required fees, and required course materials — paid with non-529 money. The credit is 100% of the first $2,000 plus 25% of the next $2,000, so $4,000 of cash-paid expenses produces the full $2,500 credit.

Question 3

Does room and board count for the AOTC?

Accepted Answer

No. Room and board is never a qualified expense for the American Opportunity Tax Credit. It is a qualified 529 expense up to the school's cost of attendance, which is why the efficient plan pays room and board from the 529 and reserves tuition and fees for the cash carve-out.

Question 4

Is the maximum AOTC $2,500 or $2,200?

Accepted Answer

It's $2,500 per eligible student, per the IRS (Pub 970 and Form 8863). Some articles published in 2026 incorrectly state $2,200; that figure is wrong. The credit equals 100% of the first $2,000 plus 25% of the next $2,000, which totals $2,500.

Question 5

What are the 2026 income limits for the AOTC?

Accepted Answer

The full credit is available with MAGI up to $80,000 (single, head of household) or $160,000 (married filing jointly). It phases out completely at $90,000 / $180,000. Married filing separately can't claim it. These thresholds are not indexed for inflation.

Question 6

What if the student is past their first four years?

Accepted Answer

The AOTC is limited to the first four years of postsecondary education and four tax years per student. After that, look at the Lifetime Learning Credit — 20% of up to $10,000 of qualified expenses, a $2,000 maximum per return, nonrefundable. The calculator flags it automatically when the AOTC isn't available.

Question 7

Does my state give a 529 deduction I might lose?

Accepted Answer

Possibly. Many states offer a deduction or credit for 529 contributions, and a few can recapture it on non-qualified withdrawals. This tool models the federal AOTC coordination only — check your own state's 529 rules before moving money, especially near year-end.