For $10,000 tuition, there is a $2500 undergrad credit and a $2000 grad student credit available.
Up to $1000 of the Undergrad credit is refundable. The post grad credit is all non-refundable.
A non-refundable credit means that it can only be used to reduce your tax liability. none of it will be added to your refund once your tax liability is reduced to zero.
A student, under age 24, is only eligible
for the refundable portion of the American Opportunity
Credit (undergrad) if he supports himself by working. You cannot be supporting yourself on
parental support, 529 plans or student loans & grants. You must have
actually paid tuition, not had it paid by scholarships & grants. It is usually best if the parent claims that
credit.
You cannot claim a credit if you are, or can
be, claimed as a dependent by someone else.
There are income limits for claiming a credit.
For details, see https://www.irs.gov/Individuals/AOTC https://www.irs.gov/individuals/llc
