It's complicated. You have to do the math. There are two support calculations to be done:
1. you must have provided more than half your own support, by any means, to not qualify as a dependent. Scholarships (and what they pay for) are ignored in that support calculation.
2. Since you are under 24, you must have provided more than half your support, with earned income (working), to qualify for the refundable portion of the AOC. Scholarships are part of that calculation, but are not earned income. Scholarships are treated as outside support, not your own support.
If your parent co-signed the loans, the loan money is considered parental support. Other wise, it is considered your own support. But it is not considered earned income.
There are two types of dependents, "Qualifying Children"(QC) and standard ("Qualifying Relative" in IRS parlance even though they don't have to actually be related). There is no income limit for a QC but there is an age limit, student status, a relationship test and residence test.
A child of a taxpayer can still be a “Qualifying Child” (QC) dependent, regardless of his/her income, if:
- He is under age 19, or under 24 if a full time student for at least 5 months of the year, or is totally & permanently disabled
- He did not provide more than 1/2 his own support. Scholarships are excluded from the support calculation
- He lived with the parent (including temporary absences such as away at school) for more than half the year
The support value of the home, provided by the parent, is the fair market rental value of the home plus utilities & other expenses divided by the number of occupants.
The IRS has a worksheet that can be used to help with the support calculation. See: http://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet_for_determining_support_4012.pdf
