"scholarships exceed my loans"
Did you mean scholarships exceed your tuition?
If you are a student, over age 23, and are not claimed as a
dependent by someone else (e.g. your parent) you may be eligible for the up to
$1000 refundable American Opportunity (tuition) Credit. That credit is not
dependent on having earned income. You must be at least a half
time undergraduate student and actually paid tuition (not just had it paid by
grants). Tuition paid by loans counts as paid by you (since you have to pay
that back, someday).
Even if your scholarships exceed you tuition, you may still be able to claim the credit. There
is a tax “loophole” available. The student reports all his scholarship, up to
the amount needed to claim the American opportunity credit, as income on his
return. That way, you can claim the tuition credit.
You can do this because that much tuition was no longer paid by "tax
free" scholarship. You cannot do
this if the school’s billing statement specifically shows the scholarships
being applied to tuition or if the conditions of the grant are that it be used
to pay for qualified expenses.
