@Houston33
Yes, you understand it correctly, but not exactly. Even though the student doesn't qualify as a dependent because he provides more than half his own support; he will not qualify for the REFUNDABLE portion (up to $1000) of the American Opportunity Credit (AOC) because not enough of that support was from earned income. This rule is only applicable to unmarried, full time students under age 24. He still qualifies for the other credits, simply because you cannot claim him, But that will do him no good, if he doesn't have enough income to have a tax liability.
Your example is correct: If total support is $50K, the student needs to have more than$25,000 of earned income to claim the refundable portion of the AOC.
Side issue: a distribution from a 529 plan is not necessarily support provided by the student, if he is the beneficiary and the parent is the owner. See:
https://ttlc.intuit.com/community/taxes/discussion/can-i-claim-money-from-a-529-fund-as-my-supportin...
