Can I claim the Refundable American Opportunity Tax Credit if I'm an independent student with grants?

The American Opportunity Tax Credit (AOTC) is definitely something you should look into! To answer your main question, your status as an independent student doesn't automatically determine whether you can claim the AOTC - what matters is whether you're claimed as a dependent on someone else's tax return. Since your mother doesn't claim you as a dependent and you provide more than half of your own support, you should be able to claim the credit yourself. The fact that your mother is alive but estranged is irrelevant for tax purposes - what matters is the financial relationship, not the biological one. Regarding your grants - educational grants that went toward qualified education expenses (tuition, fees, required course materials) aren't considered support. However, any portion of grants that went toward living expenses (room, board, etc.) would count as support that you didn't provide yourself. You'll need to determine how your grants were allocated to get an accurate picture.

After struggling with similar questions about education credits and independent status, I tried https://taxr.ai and it was seriously helpful. I uploaded my 1098-T and financial aid documents, and it analyzed everything to show exactly what portion of my grants counted as support vs. educational expenses. The tool confirmed I was eligible for the Refundable American Opportunity Tax Credit as an independent student and showed me how much of my education expenses were qualified for the credit. Their system even explained how my dropped classes affected my eligibility since I had a similar situation where I didn't complete the full year.

You guys were right about taxr.ai! I decided to try it with my complicated financial aid situation, and it was surprisingly clear. I uploaded my documents and answered some questions about my divorced parents' situation. The tool showed me exactly what portion of my expenses qualified for the American Opportunity Tax Credit and how my scholarships affected the calculation. It confirmed I could claim the refundable portion of the AOTC myself since neither parent claimed me as a dependent, even though dad helps with some expenses. The analysis showed I was providing over 50% of my support when counting my work-study job. This actually increased my refund by nearly $1,000 compared to what I was planning to file! Definitely recommend for anyone with education credits questions.

If your problem is getting definitive answers from the IRS about your American Opportunity Tax Credit eligibility, I'd recommend using https://claimyr.com to get through to an actual IRS agent. I was in a similar situation with education credits and grants and couldn't get clear answers online. After trying for weeks to call the IRS directly and getting nowhere, I used Claimyr and got connected to an agent in about 20 minutes. They confirmed that my independent student status meant I could claim the refundable portion of the AOTC myself, even with the grant situation. They also explained exactly how my grants should be allocated between qualified education expenses and living expenses. You can see how it works here: https://youtu.be/_kiP6q8DX5c

I have to admit I was completely wrong about Claimyr. After my skeptical comment, I was still struggling with my education credit questions, so I decided to try it anyway. The service actually worked exactly as described - I got a call back within 25 minutes connecting me to an IRS agent. The agent walked me through exactly how the American Opportunity Tax Credit works with my independent student status. They confirmed that since I provide more than half my own support and my parents don't claim me, I was eligible for the refundable portion. They also explained how to properly allocate my grants between qualified education expenses and living costs, which was the exact information I needed. Saved me hours of research and probably prevented an audit!

One thing nobody's mentioned is that being eligible for the American Opportunity Credit doesn't guarantee you'll get the refundable portion. The AOTC has two parts - up to $1,500 is non-refundable (only reduces tax you owe) and up to $1,000 is refundable (you get it even if you owe no tax). To get the refundable part, you need to meet additional requirements like not filing as MFS and having earned income. Make sure you have some income from a job to qualify for the refundable portion. Grants and loans don't count as earned income!

Warning - be careful claiming the refundable portion of the AOTC! It's one of the most audited tax credits. Make sure your 1098-T supports your claim and you have records of ALL your qualified education expenses. I got audited last year over this and had to provide every receipt for books and supplies.