On her own tax return, she is asked the question whether she paid more than half of her own support. If the answer is No, then she has to say that she can claimed as a dependent by someone else (even if you do not actually claim her).
As someone who can be claimed as a dependent but is not actually claimed, she can claim the non-refundable part of the American Opportunity credit ($1,500), but not the refundable part ($1,000).
If she has no tax liability, she cannot use the credit at all. In this case, by claiming her as a dependent, you will get the Other dependent credit of $500. Please note that this credit begins to phase out at income of $200,000 (single) or $400,000 (MFJ), which is higher than the phase-out of the AOTC.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
