For example, consider a tax credit for higher education costs, such as the existing American Opportunity Tax Credit (AOTC).

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The effects are just right, they are not Star Wars AOTC but they don't need to be, do they?

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For example, you can find the cost of Pell grants in the Department of Education budget, but not the cost of the AOTC.

FORBES: Asking the right tax questions - Guest Post by Professor Annette Nellen

Currently, the federal government offers two types of credits to offset tuition: the American Opportunity Tax Credit (AOTC) and the Lifetime Learning Credit.

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First proposed by President Barack Obama during his 2008 campaign, the AOTC is a more generous four year version of the old two-year Hope College credit for undergraduates.

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The AOTC is not tied to that timing.

FORBES: Asking the right tax questions - Guest Post by Professor Annette Nellen

The AOTC may be claimed in the same year that a tax-free distribution is made as long as the same expenses are not used to calculate the tax-free distribution AND the American Opportunity Tax Credit.

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It is very important to remember that you cannot claim any of the college tax credits, including the AOTC, based on expenses that were used to calculate the tax-free portion of a distribution from a 529 college savings or prepaid plan, or a Coverdell Education Savings Account (ESA).

FORBES: College Tax Credit: The $2,500 American Opportunity Tax Credit