Why is my son being told his 1098-T expense can't be used on his return this year when he only makes $3500 in income.

[daisy518]

my wife and i have tried to claim the 1098-T on our return but we make to much money. We decided this year to put it on my sons return and he can't claim it either and I need to know why

[Hal_Al]

Because Congress said so when they wrote the law.  

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 student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working. 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. 

He cannot claim a credit if he is , or can be, claimed as a dependent by someone else**. 

**But there is a provision that allows the student to claim some of the tuition credit himself. If the student actually has a tax liability he can claim a non-refundable credit.  But then the parent must forgo claiming the student's dependent credit and the student still can’t claim himself. 

[Carl]

With only $3500 of income earned by the student, there is no tax liability at all. Since the parent's income is over $160K, nobody gets any credits for anything concerning education since your son qualifies as your dependent.