Federal loans, Pell grants and tuition waivers are not considered "earned income". You can
claim an American opportunity credit for qualified education expenses paid with
the proceeds of a loan Here is a link to an IRS interview to determine if you qualify: Am I Eligible to Claim an Education
Credit?
If you do not have enough income on your tax return to show that you provided more than half of your own support and your parents can claim you, your parents may be able to claim the AOC on their return.
If there are qualified education expenses for you during a tax year, either you, or whoever is claiming you as a dependent, but not both of you, can claim an American opportunity credit or lifetime learning credit for your expenses for that year.
If someone claims an exemption for you on their tax return, then only they are able to claim the credit based on your expenses. They would treat any expenses paid (or deemed paid) by you as if they had paid them themselves. They would include these expenses when figuring the amount of your credit. And you, as her dependent, wouldn’t be able to claim the credit.
If no one else claims you as an exemption, then only you can claim credit, and your parent can't claim the credit based on your expenses.
Generally, students receive a Form 1098-T Tuition Statement, from their school by January 31.
This statement helps you figure your credit. The form will have an amount in
either box 1 or 2 to show the amounts received or billed during the year. But,
this amount may not be the amount you can claim. See qualified education
expenses for more information on what amount to claim.
Check the Form 1098-T to make sure it is correct. If it isn’t
correct or you do not receive the form, contact your school.
