Q. Can I let kid file tax return by herself to get education credit?
A. Yes and No.
Unless she is over age 23 or her W-2 earnings are more than half her support or she is not a full time student, she is not eligible for the refundable portion of the American Opportunity Credit.
If she has a tax liability, she can claim a non-refundable credit, if you forgo claiming her as a dependent (and the $500 other dependent credit). In TurboTax, she indicates that she CAN be claimed as a dependent but will not actually be claimed.
Q. Can medical school application and preparation course etc fee be accounted as expense for education credit?
A. Yes and No. The application fee can be counted, if it was paid in the same year that the the student was enrolled in classes. The preparation course fee can not be counted, unless it was taken at the same school or another "eligible institution". Grad students are not eligible for the American Opportunity Credit, but can claim the less generous Lifetime Learning Credit.
