@SenoraMarissa said " I do receive about 20,000 in grants every year that I pay my tuition and living expenses with but none of it is taxable."
Technically, that's probably not true. Scholarships that pay for qualified educational expenses (QEE - tuition, fees, books and other course materials) is tax free. Scholarship amounts that exceed QEE is taxable income, on the student’s tax return. That is, scholarships that pay for living expenses is taxable income. But, if that amount is less than $12,550, you still do not have enough income to have to file a tax return. Taxble scholarship is not classified as "earned income" for purposes of claiming the child tax credit or earned income credit. So, you still cannot claim those. Loans (as oppossed to scholarships/grants) are not reportable income, regardless of how spent.
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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. That credit is not dependent on having either kids or earned income. You must be at least a half time undergraduate student. There's even a loop hole available to claim the credit, if you are on scholarship.
The “loop hole”. The student reports all his scholarship, up to the amount needed to claim the American Opportunity Credit (AOC), as income on his return. That way, the parents (or himself, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship. You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.
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, the parents can claim $4000 of qualified expenses on their return.
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.
