Can I use 529 money to pay college tuition and also claim the American Opportunity tax credit in the same year? --R.H., Paintsville, Ky.
Yes, if you plan carefully. The American Opportunity credit can be worth up to $2,500 per student for each of the first four years of college. It is calculated as 100% of the first $2,000 in eligible expenses (tuition and fees) for each student, plus 25% of the next $2,000. You can’t double-dip tax breaks—that is, claim the credit for the same expenses you paid with tax-free money from your 529 plan—so it’s best to pay at least $4,000 of tuition charges from money outside of your 529. Then you can use the 529 money tax-free for the remaining tuition and fees, plus other eligible expenses, such as room and board, books, and a computer and Internet access.
From just $107.88 $24.99 for Kiplinger Personal Finance
Be a smarter, better informed investor.
Sign up for Kiplinger’s Free Newsletters
Profit and prosper with the best of expert advice on investing, taxes, retirement, personal finance and more - straight to your e-mail.
Profit and prosper with the best of expert advice - straight to your e-mail.
-
The Real Cost of Streaming Live Sports in 2025Streaming your favorite team keeps getting more expensive. Here’s the true cost of sports — and how to save.
-
It Could Soon Be Harder to Get a Refund on a Flight Gone WrongThe Department of Transportation's deregulation efforts are taking aim at your rights to compensation for delays, canceled flights, lost baggage and more.
-
Standard Deduction 2025 Quiz: How Much Do You Really Know?Quiz Test your knowledge of IRS rules that impact how much money you keep in your wallet.
-
New Bill Would End Taxes on Social Security Benefits in 2026: What Retirees Should KnowTax Law Congress could look to high earners to help offset lost revenue and possibly shore up the Social Security program.
-
New $6,000 'Senior Bonus' Deduction: What It Means for Taxpayers Age 65-PlusTax Changes If you’re an older adult, a new bonus tax deduction could provide a valuable tax benefit. Here's how it works.
-
Claiming the Standard Deduction? Here Are 10 Tax Breaks For Middle-Class Families in 2025Tax Breaks Working middle-income Americans won’t need to itemize to claim these tax deductions and credits — if you qualify.
-
Over Age 65? New $6,000 'Senior Bonus' Deduction Is Available Even If You ItemizeTax Changes If you’re an older adult, a new bonus tax deduction could provide a valuable tax benefit. Here's how it works.
-
New Trump Tax Bill: Five Changes Homeowners Need to Know NowTax Changes Trump’s new tax legislation is reshaping how tax breaks for homeowners work.
-
How the 2025 Child Tax Credit Rules Impact Single ParentsTax Credits New changes to family tax credits, like the Child Tax Credit, will impact the eligibility of some households.
-
How Your 2025 Wedding Could Save You Money on TaxesTax Breaks There are some wedding expenses that are tax-deductible, and you don’t want to miss out on savings.
