If you are a student, over age 23, and are not claimed as a dependent by someone else (e.g. your parent) you may be eligible for the up to $1000 refundable American Opportunity (tuition) Credit (AOC). That credit is not dependent on having either kids or earned income. You must be at least a half time undergraduate student. Tuition and other qualified expenses (fees and course materials) paid with student loan money qualifies for the AOC There's even a loop hole available to claim the credit, if you are on scholarship (including Pell).
How the loop hole works. The student reports all his scholarship, up to the amount needed ($4000 for most people) to claim the American Opportunity Credit (AOC), as income on his return. That way, he can claim the tuition credit on his return. You can do this because that much tuition was no longer paid by "tax free" scholarship. You cannot do this if the conditions of the grant are that it be used to pay for qualified expenses (Pell grants are not restricted).
Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, she can then claim $4000 of qualified expenses for the tuition credit.
Books and computers are also qualifying expenses for the AOC. So, extending the example, the student had another $1000 in expenses for those course materials, paid out of pocket, she would only need to report $5000 of taxable scholarship income, instead of $6000.
The $6000 (or $5000) of reportable income is not enough to generate any actual income tax (it's below the $14,600 standard deduction). Scholarship income does not qualify as "earned income" for either the child tax credit or the earned income credit. *
*Scholarships are a hybrid between earned and unearned income. It is earned income for purposes of the $13,850 filing requirement ($14,600 for 2024) and the dependent standard deduction calculation (earned income + $400 ($450 for 2024)). It is not earned income for the kiddie tax, child tax credit and other purposes (e.g. EIC). For grad students and post grad fellows, scholarship, stipend and fellowship income is earned income ("compensation") for IRA contributions.
