My son has a Pell grant but still had to pay $784 out of pocket for tuition. Can he claim this?

Q. My son has a Pell grant but still had to pay $784 out of pocket for tuition. Can he claim this?

A. No. But you can and more. 

If the student is your dependent, only you can claim the tuition credit on his education, even if he paid with his own money.  Furthermore most students are not eligible* for the refundable portion of the American Opportunity Credit (AOC), but the parents are.

Furthermore, there is a tax “loop hole” available. The student reports all his scholarship, up to the amount needed to claim the American Opportunity Credit (AOC), as income on his return. That way, the parents  (or himself, if he is not a dependent) can claim the tuition credit on their return. They 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. Pell grants do not have that restriction, so you are eligible for the "loop hole". 

Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.

Books and computers are also qualifying expenses for the AOC. So, extending the example, the student had another $1000 in expenses for those course materials, paid out of pocket, she would only need to report $5000 of taxable scholarship income, instead of $6000

*Reference: Line 7 instructions for form 8863. https://www.irs.gov/instructions/i8863

Ask your son if he has a Form 1098-T. If he paid tuition and received scholarships/grants, he should have received one.