"My kid cannot be claimed as my dependent for 2017 since her income was too high after finishing college in the first quarter of 2017."
If the student was under the age of 24 on Dec 31 of the tax year, then their income does not matter. They could earn a million dollars and still qualify as your dependent.
"Not knowing she was below half-time as a student in that quarter,"
Yep, that sucks. If the student had not graduated in may and was a full time student for any other semester that started in the tax year, this would not be a problem then. That is what makes the requirement to claim the student as a dependent change from the "dependent child" rules to the "dependent relative" rules. So that makes the student's taxable income matter.
Therefore since you do not qualify to claim the student on your tax return, you also can't claim any of the education stuff on your return for that specific student. The student will claim it all on their own tax return.
But as I pointed out in my original answer above, it takes 5 calendar years to get that 4 year degree. That's why it's so important in the student's senior year, to pay all of those qualified expenses for the fall semester, BEFORE the end of the spring semester so you can claim those expenses and credits in what would be the 4th calendar year of the student's last year in college.
