Q. So if my scholarship + grant was $40,000+ then I don't qualify?
A. That's not the reason you don't qualify. There's a special rule, for full time students, under age 24, that disqualifies you for the refundable portion of the American Opportunity Credit.
Scholarships and grants that pay for qualified educational expenses (tution, fees, books, computer, and other course materials) are tax free. Scholarships that pay for room and board and other living expenses is taxable income to you. If taxable scholarship is added to your $7170 earned income, you may have enough income to have a tax liability. In that case, you can claim the American Opportunity Credit as a non-refundable credit (up to the full $2500).
