@jzzenner - Yes, that is essentially correct, but not exactly.**
A 20 y.o., in his 2nd year of collage, who worked this summer making under $4000, surely still qualifies as your dependent. You should be claiming the full $2500 credit, not just the $1000 refundable portion.
**There's a new urban myth among college students that says they can get a $1000 from the government just for filing a tax form. For most of them, they simply aren't eligible. A full time unmarried student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit if if the majority of his support comes from his own earned income. You cannot be supporting yourself on parental support, 529 plans or student loans & grants. You must have actually paid tuition, not had it paid by scholarships & grants. It is usually best if the parent claims that credit.
You cannot claim a credit if you are, or can be, claimed as a dependent by someone else.
