Whether or not you will get a "big break" on your taxes for paying tuition in college depends on a number of factors. Assuming you are an undergraduate and qualify for the American Opportunity Credit, credits for qualified education expenses (tuition, fees and in some cases books and course related materials and equipment) are tied to dependency. Whoever claims the student as a dependent (student or someone else) on their tax return is the one who can claim qualified education expenses paid out of pocket or with loans for deduction or credit. It doesn't matter who actually paid the expenses. On the other hand, scholarships that paid non qualified expenses such as room and board must be entered on the student's tax return as income.
The credit is in two parts--non refundable and refundable. The taxpayer can't get any of the up to $1500 of the non refundable portion of the credit if the taxpayer owes no taxes because the non refundable portion only offsets taxes owed. The taxpayer will get none of the up to $1000 of the refundable portion of the credit if (1) the taxpayer claiming the credit is (a) under age 18 or (b) age 18 at the end of the year, and their earned income was less than one-half of their own support or (c) a full time student over 18 and under 24 and their earned income was less than one-half of their own support, and (2) the taxpayer has at least one living parent, and (3) the taxpayer does not file a joint return.
TurboTax will determine whether you qualify for the credit or not when you enter the 1098-T you receive from the school and answer all the questions.
