Does Receiving the American Opportunity Credit Affect Your Pell Grant?

The amount of money you'll receive through a Pell Grant depends on your enrollment status and income. Students without the financial means to pay any money for their educations, and who are enrolled in school full-time, can gain a maximum annual award of $5,645. As your income goes up, so does your expected educational contribution. This results in a lower Pell Grant award. If you can afford to contribute $5,082 or more to your education, you can't receive a Pell Grant.

If you make less than $80,000 per year -- or $160,000 for married couples filing jointly -- the American Opportunity Credit allows you to get a credit for up to $2,500 of qualifying education expenses. The credit won't reduce your taxable income. Instead, it reduces the amount of taxes you have to pay, and can help you get a refund at tax time.

Because the American Opportunity Credit doesn't reduce your taxable income, it won't lower your expected family contribution to your education. If you're already eligible for a Pell Grant, it's unlikely that receiving the credit will alter your eligibility. Instead, your eligibility is based on your entire financial picture. If the credit helps you receive a tax refund after filing your taxes, this is a repayment of money you've already paid in withholding or estimated taxes, so it won't affect your reported income.

Although a tax credit won't affect your Pell Grant eligibility, claiming too few deductions can. You can deduct some of your tuition and expenses. If you don't deduct anything because your education is covered by a Pell Grant, this could affect your adjusted gross income and therefore your grant eligibility. The more deductions you claim, the lower your AGI. Similarly, changes in your income -- such as a new, higher paying job -- may also render you ineligible.