My child file tax return independently but he only has $2,300 income in total, can he get AOTC?

[MarilynG1]

Maybe.  Whether he qualifies for the American Opportunity Credit depends on much he (or you) paid out-of-pocket for Education Expenses. 

If he has a 1098-T that has a larger amount in Box 1 (Tuition) than in Box 5 (Scholarships), he may qualify for a credit.

However, if he only earned $2,300, did he support himself?  If not, he is still your dependent and you can add his Education Expenses to your return, which will probably be more beneficial anyway. 

[harrivy]

Hi Marilyn,

He follows TurboTax instruction to fill in 1098-T and both “American Opportunity Credit” and “Lifetime Learning Credit” got qualified. However, in next step, when the software does “maximize my education tax break”, it shows he can’t claim an education tax break.

Can you please advise why is that?

[Vanessa A]

How old is her?  If he is under 24, then he cannot claim the refundable portion of the AOTC, only the nonrefundable portion.  Since his income is only $2,300, the nonrefundable portion would not help him at all since he has no tax liability. It would be better for you to claim him and claim the AOTC if you qualify for it.  Not claiming him, is not beneficial to him with the income he currently has tax wise. 

"If you were under age 24 at the end of 2023 and the conditions listed below apply to you, you cannot claim any part of the American opportunity credit as a refundable credit on your tax return. Instead, you can claim your allowed credit, figured in Part II, only as a nonrefundable credit to reduce your tax.

You don't qualify for a refundable American opportunity credit if 1 (a, b, or c), 2, and 3 below apply to you.

1. You were:

a. Under age 18 at the end of 2023, or

b. Age 18 at the end of 2023 and your earned income (defined later) was less than one-half of your support (defined later), or

c. Over age 18 and under age 24 at the end of 2023 and a full-time student (defined later) and your earned income (defined later) was less than one-half of your support (defined later).

2.At least one of your parents was alive at the end of 2023.

3.You're not filing a joint return for 2023."  Instructions for form 8863

The person who claims the student can claim the credit even if they did not actually pay the expenses out of pocket them.  The rules state, that you, your dependent or a third party pays for the expense.  This basically means, it doesn't matter who pays, the person claiming the student claims the education credit. 

Who can claim an education credit?

There are additional rules for each credit, but you must meet all three of the following for both:

1. You, your dependent or a third party pays qualified education expenses for higher education.
2. An eligible student must be enrolled at an eligible educational institution.
3. The eligible student is yourself, your spouse or a dependent you list on your tax return.