Yes. However, you need to subtract that amount from your qualified education expenses before claiming the tax credit. So, if you have $5,000 in costs and a $4,000 grant, you would be able to claim $1,000 of qualified education expenses for the AOTC. For the purposes of the AOTC, grants include: Tax-free parts of scholarships and fellowships Pell Grants and other need-based education grants Employer-provided assistance Veterans’ educational assistance Any other tax-free payments that you receive for educational aid (excluding gifts and inheritances)