Technically there is a provision that allows your student-dependent to claim a federal tuition credit. But, from a practical matter it seldom works out. As previously stated an unmarried student, under age 24 (except orphans), is only eligible for the refundable portion of the American Opportunity Credit (AOTC) if he/she supports himself by working. She cannot be supporting herself on savings, student loans & grants, parent's employer tuition plan, and 529 plans and parental support.
If the student actually has a tax liability, there is a provision to allow him to claim a non-refundable tuition credit. But then the parent must forgo claiming the student as a dependent, and the $500 other dependent credit. The student must still indicate that he can be claimed as a dependent, on his return. This is worth up to $2500, if the student has that much tax liability (AOTC shifts to all non refundable).
