Q. Can I claim my college student child as dependent and at the same time, can she file her own taxes in order to report her college expenses and income ?
A. No.
Yes, you can claim your child as a dependent, even though she is filing a separate return, as long as she marks on her return that she is being claimed by someone else.
But, if she wants to claim the tuition credit, you will have to forego claiming her as a dependent, in order to allow her to claim that. Dependents are not allowed to claim the credit. She still marks that she CAN be claimed as a dependent, but in TurboTax she marks that she will not actually be claimed (that doesn't show on the actual tax form 1040).
While technically there is a provision that allows your student-dependent to claim a federal tuition credit, from a practical matter it seldom works out. A full time student, under age 24, is only eligible for the refundable portion ($1000) of the American Opportunity Credit (AOTC) if he/she supports himself by working. She cannot be supporting herself on student loans & grants and 529 plans and parental support. It is usually best if the parent claims that credit.
If the student actually has a tax liability, there is a provision to allow him to claim a non-refundable tuition credit. But then the parent must forgo claiming the student as a dependent, and the $500 other dependent credit. The student must still indicate that he can be claimed as a dependent, on his return. This is worth up to $2500 (AOTC shifts to all non refundable)
