Since you are not claiming him as a dependent, if he is paying his student loans, then he may be able to claim the student loan interest deduction. In order to claim the Student Loan interest, you also must be legally obligated to pay the interest and have paid the interest. As a married couple, your MAGI must be less than $155,000 to take the full deduction and less than $185,000 to take a gradually reduced deduction.
The Scholarship will not affect him if it is for less than his tuition in box 1. If box 5 is more than box 1 then the amount that is over that was not used for eligible education expenses, would become taxable income. If this amount was used to cover Room and board then it would not be considered eligible education expenses.
How old is he? What degree level is he working on?
If he is under 24, his ability to claim the AOTC may be limited.
"If you were under age 24 at the end of 2023 and the conditions listed below apply to you, you cannot claim any part of the American opportunity credit as a refundable credit on your tax return. Instead, you can claim your allowed credit, figured in Part II, only as a nonrefundable credit to reduce your tax.
You don't qualify for a refundable American opportunity credit if 1 (a, b, or c), 2, and 3 below apply to you.
1. You were:
a. Under age 18 at the end of 2023, or
b. Age 18 at the end of 2023 and your earned income (defined later) was less than one-half of your support (defined later), or
c. Over age 18 and under age 24 at the end of 2023 and a full-time student (defined later) and your earned income (defined later) was less than one-half of your support (defined later).
2.At least one of your parents was alive at the end of 2023.
3.You're not filing a joint return for 2023." Instructions for form 8863
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