Re-read the below. It's a lot, because it covers multiple situations. The thing to do is print it out first. Then as you read it through, use a black marker to line out that which is not applicable to your situation. Then when you read it through again you'll only be reading that which applies to your situation and it's easier to comprehend then.
Overall though, you the parent claim the student as your dependent. Period.
Next, if all qualified education expenses are covered by scholarships, grants and/or 529 funds, then while you the parent claim the student as your dependent, that's all you claim. You the parent don't claim or report anything on the education stuff because you the parent get no credits, since you the parent did not pay any "qualified" out of pocket expenses. (All qualified expenses are covered by scholarships, grants and/or 529 funds)
The student files their own tax return *IF* the total of
1) excess scholarships, grants, 529 funds not used for qualified expenses.
2) W-2 earned income earned by the student
3) self-employed income earned by the student
DOES EXCEED $6300. If the total of all three items above does NOT exceed $6300, then the student is not required to file a tax return and nothing is reported concerning education expenses on any tax return what-so-ever.
Note that if the student is required to file a tax return, then the student is also required to select the option for "I can be claimed on someone else's return". The student must select that option weather you the parent claim the student as your dependent or not. The student must select that option because you the parent *QUALIFY* to claim the student as your dependent.
