Yes. The education credit goes to the person claiming the student's exemption (dependent), even though the student paid for her own books.
Furthermore, there
is a tax “loophole” available. The student reports all his/her scholarship, up to
the amount needed to claim the American opportunity credit, as income on his
return. That way, the parent 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 2.
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.
