About Form 8863, Education Credits American Opportunity and Lifetime Learning Credits Internal Revenue Service

The Internal Revenue Service Form 8863 is used to calculate and claim education credits. Form 8863 was used to calculate the American Opportunity Credit and the Lifetime Learning Credit. The American Opportunity Credit is worth up to $2,500 and the Lifetime Learning Credit is worth up to $2,000. Use Form 8863 to find out how much you qualify for. To claim the full credit, your modified adjusted gross income must be $80,000 or less ($160,000 or less for married filing jointly). This is an optional tax refund-related loan from MetaBank®, N.A.; it is not your tax refund.

• To fill outForm 8863, complete the education section by answering the interview questions.
• Please seek guidance from a tax professional.
• To figure your support, count support provided by you, your parents, and others.
• While you can’t claim both credits for one student, you can use one form to claim both credits for separate students.
• Also, the scholarship or fellowship grant must be one that may be used for expenses other than qualified education expenses .

A qualified higher education expense is any money paid by an individual for expenses required to attend a college, university, or other post-secondary institution. QHEEs include tuition, books, fees, and supplies such as laptops and computers, but expenses like insurance and health fees are not eligible. In addition, the student’s income cannot exceed $90,000, but joint filers can earn up to $180,000 and still qualify. Claiming the AOTC can reduce your tax liability by up to $2,500. Plus, it’s a refundable credit, so you can get up to 40% refunded through your tax return.

How to Fill Out the 8863 Form

Complete part 3 on Form 8863, page 2, for each person claimed. Enter the student’s personal information — name and Social Security number — on lines 20 and 21. Line https://turbo-tax.org/a 22 asks for information about the eligible post-secondary school. Use Form 1098-T to fill in this section. Fill out the credit section for the one you want to claim.

Those expenses include tuition and required enrollment fees. In the case of the AOC, “course materials that the student needs for a course of study” are also eligible expenses.

TAX CENTER

All of this will be used to complete Form 8863 and include as part of your tax return for the education credit that works best for your situation. The credit is calculated based on the amount you pay for tuition, fees, books and supplies required for the coursework. The credit is only available to students who enroll at least half-time for one or more academic semesters during the tax year and are pursuing a degree or other recognized credential. To claim the credit, your Modified Adjusted Gross Income for 2021 must be below $90,000 if filing individually, or $180,000 if married filing jointly. Receipt of a 1098-T form does not establish eligibility for certain educational tax credits.

There are some notable changes, with recent legislation. The Taxpayer Certainty and Disaster Tax Relief Act of 2020 repealed the tuition and fees deduction for tax years beginning after 2020, in exchange for increased income limitations for the Lifetime Learning Credit. Use Form 8863 to figure and claim your education credits, which are based on qualified education expenses paid to an eligible postsecondary educational institution. Use Form 8863 to figure and claim your education credits, which are based on adjusted qualified education expenses paid to an eligible educational institution . Both the AOC and the LLC are for people with “qualified education expenses paid to an eligible postsecondary educational institution,” in the words of the IRS.

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H&R Block tax software and online prices are ultimately determined at the time of print or e-file. LLC, you must be a student who is enrolled in at least one course during the tax year, AND have a modified adjusted gross income below the form 8863 turbotax threshold (for 2020, the threshold is $69,000 or $139,000 for joint filers). If the student attended only one educational institution, enter the information about the institution and answer the questions about Form 1098-T in column .

The American Opportunity credit equals 100 percent of the first $2,000 in expenses plus 25 percent of the excess. For the Lifetime Learning credit, you simply multiply your eligible expenses, up to $10,000, by 20 percent. The Lifetime Learning credit can reduce your tax liability by up to $2,000 per tax return for the cost of enrollment in a post-secondary school. The expense of books and other supplies are not covered by this credit unless the school requires it as a condition of enrollment and you pay the school directly for these items. The American Opportunity credit can reduce your tax liability by up to a $2,500 per student for educational expenses you or a dependent student incur during the first four years of post-secondary schooling.