Yes, you're on the right track, but I would ask, since you say she was a full-time student in the Fall of 2024, what about the costs for the entire year?
Was this person a High School Student during the first half of the year? If yes, I would say you would need to add the portion of property tax the parents paid that covered the school tax, or tuition payments the parents made.
What about clothing? What about the cost of the Health Insurance that the parents supply?
Additionally, if she saved any money, that would be subtracted from the amount she supplied. In other words, if she took a loan for 2,722 and earned 6,000, that would show 8,722 the student supplied; however, if there is 1,000 of that in their checking account, the student only supplied 7,722.
You say "Between the loans and necessary expenses the total caps at $4,000", but the loan is NOT an expense, it is part of the student's supplied support.
In your example, it's hard to assume this student supplied more than half their own support, but it is also possible.
If the parents (or someone else) supports the student, they should apply for an education credit if applicable.
You ask "Last question - If she does not pass the support test, would it make sense for her parents to claim her, then give her the refundable credit for tuition?"
Make sense? It could, but the truth is that if the student does not pass the support test and the parents claim her, resulting in a credit for the parents, it would be a credit for the parents. What they do with the credit would be up to the parents.
To make things easier, ask yourself, "If the student made twice as much in 2024, would they have been able to survive on their own?" If no, then they probably did not supply more than have their own support in 2024.
If this is not helpful and/or the student files for the refundable portion of the credit, be sure the student keeps with their tax file the worksheets they used to determine that they supplied more than half of their own support.
IRS support worksheet
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