If she increase her taxable income to $24,000 (so she's paying tax on $4,000 that went to tuition), can she claim the AOC? How will she increase her taxable income? You are not allowed to manipulate income to lower it or increase it. You must report all income as it was received.
Scholarship income does not count when figuring out the American Opportunity Tax Credit, so if this is her only income, she is not eligible for the credit.
Also, scholarship income does not count as her providing more than half of her own support. This means, you may still be able to claim her as a dependent.
Here is a link with more information on a child under 24 claiming the AOTC and "supporting" themselves.
**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"
