Expense Reduction
The amount of qualified higher education expenses used in determining the exclusion allowed under the rules for U.S. savings bonds for education must be reduced by:
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The amount of those expenses that are used in determining the American Opportunity and Lifetime Learning Credits
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Scholarships and fellowships
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The expenses used to figure the tax-free portion of distributions from a Coverdell ESA or a Qualified Tuition Plan
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VA education benefits
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Employer-provided education assistance payments; and
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Qualified tuition reduction amounts.
Reduction is not required for gifts and inheritances.