Q. Can I choose to not claim college student as dependent because my income into high for tuition credit and then she can claim it herself?
A. Simple answer: no.
Q. She tried to amend her return to say someone else could claim her as a dependent but they are not actually going to claim her but TurboTax said she still didn't qualify for the tuition tax credit even though she has a 1098-T. Is that correct?
A. Probably
While technically there is a provision that allows your daughter to claim a tuition credit, from a practical matter it seldom works out. A student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit (AOTC) if she supports herself by working . She cannot be supporting herself on student loans & grants and 529 plans and parental support. .
If the student actually has a tax liability, there is a provision to allow him to claim a non-refundable tuition credit. But then the parent must forgo claiming the student as a dependent, and the $500 other dependent credit. The student must still indicate that she can be claimed as a dependent, on her return. This is worth up to $2500 (AOTC shifts to all non refundable)
