@Rembrandt There is no bug. That's the rules: a half time+, non-dependent, student qualifes for the refundable portion of the AOTC but some full time students do not.
A full time, unmarried student, under age 24, even if you don't qualify as a dependent, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working, or is an orphan. You cannot be supporting yourself on parental support, 529 plans or student loans & grants. It is usually best if the parent claims that credit.
From the Pubs and form 8863 instructions: He does not qualify for the (up to) $1,000 refundable portion of the American Opportunity Credit if items 1, 2, and 3 below apply to him.
1. He was:
.....a. Under age 18 at the end of 2021, or
......b. Age 18 at the end of 2021 and his earned income was less than one-half of his support, or
......c. A full-time student over age 18 and under age 24 at the end of 2021 and his earned income was less than one-half of his support .2. At least one of his parents was alive at the end of 2021.
3. He is not filing a joint return with his spouse for 2021.
When you indicate that you are a full time student, under 24, in the personal info section, Turbotax (TT) will generate the earned income and living parent questions , in the personal info interview.
Why are the rules that way? As @NCperson said, It's to keep ineligible high income parents from switching the refundable credit to the student. Note the similarity to the kiddie tax rules. If the student (even full time) has a tax liability, he is allowed to claim the non refundable AOTC. In that case, the refundable portion becomes non-refundable. That is, if the student has a least a $2500 tax liability, he gets the full $2500 AOTC. The parent must forgo claiming the student as a dependent (and the $500 other dependent credit).
Yep, it's complicated. TT can handle it, but you have to read and answer the interview questions carefully.
