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Get your taxes done using TurboTax
It depends. If the scholarships are in excess of tuition, you generally cannot claim an education credit for tuition that was paid for with tax free money.
However, if she would increase the amount of the scholarships considered to be taxable income, it would be possible for you to claim the American Opportunity Tax Credit if you are within income limits. The best thing to do is to play around with the numbers. See how adding the credit to your return helps you vs increasing her taxable income.
The reason she would not qualify is because scholarship income does not count towards her providing her own support. This means she would still qualify as a dependent. Since she would still qualify as a dependent, she would only be eligible for the non-refundable portion of the AOTC. So basically, she would be increasing her taxable income to decrease her tax liability but would have no actual benefit in doing so.
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