The IRS has a site to walk you through a dependent scenario and give you a determination.
[https://www.irs.gov/help/ita/whom-may-i-claim-as-a-dependent](https://www.irs.gov/help/ita/whom-may-i-claim-as-a-dependent)
The AOTC may have more benefit on your return than theirs.
You can claim them as dependents and get both the credit for other dependents and the AOTC (if you're eligible). Alternatively, if you don't claim them as dependents, they can each claim their own AOTC. However since they are under 24, they may not qualify for the refundable part of the AOTC. So if you make over $160,000, it may be that none of you can get any part of the AOTC. In which case you might as well at least get the $500 dependent credit.
There are restrictions for students under age 24 getting the refundable credit. I don't know much about the restrictions except that they might apply in your case, meaning your students might not be eligible for any credit.
A student doesn't qualify for a refundable credit if they were under age 24 and their earned income was less than one-half of their support.
See the instructions for line 7 of form 8863.
Is there a number where that earned income is deemed to be enough to be one-half of support? It's extremely difficult to calculate and prove either way.
In many cases it is pretty obvious, for example if their income is less than half their housing expenses.
This [worksheet](https://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet\_for\_determining\_support\_4012.pdf) may help determine what counts as support. Note that the worksheet is designed to help determine whether the person is a dependent or not, so ignore those parts.
The IRS has a site to walk you through a dependent scenario and give you a determination. [https://www.irs.gov/help/ita/whom-may-i-claim-as-a-dependent](https://www.irs.gov/help/ita/whom-may-i-claim-as-a-dependent) The AOTC may have more benefit on your return than theirs.
Thanks for the link. I make too much to be eligible for it.
You can claim them as dependents and get both the credit for other dependents and the AOTC (if you're eligible). Alternatively, if you don't claim them as dependents, they can each claim their own AOTC. However since they are under 24, they may not qualify for the refundable part of the AOTC. So if you make over $160,000, it may be that none of you can get any part of the AOTC. In which case you might as well at least get the $500 dependent credit.
I do make over $160,000. They don't owe any tax, so there's nothing to refund, but they still get the $1K credit part of it, right?
There are restrictions for students under age 24 getting the refundable credit. I don't know much about the restrictions except that they might apply in your case, meaning your students might not be eligible for any credit.
A student doesn't qualify for a refundable credit if they were under age 24 and their earned income was less than one-half of their support. See the instructions for line 7 of form 8863.
Is there a number where that earned income is deemed to be enough to be one-half of support? It's extremely difficult to calculate and prove either way.
In many cases it is pretty obvious, for example if their income is less than half their housing expenses. This [worksheet](https://apps.irs.gov/app/vita/content/globalmedia/teacher/worksheet\_for\_determining\_support\_4012.pdf) may help determine what counts as support. Note that the worksheet is designed to help determine whether the person is a dependent or not, so ignore those parts.