Fillable Form 8863

What is Form 8863?

IRS Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits), is an Internal Revenue Service (IRS) form used to identify and claim your education credit based on education expenses to a qualified educational institution.

The American Opportunity Credit (AOTC) reduces your tax liability for various qualified educational expenses, including tuition, fees, books, and supplies required for the coursework. The Lifetime Learning Credit (LLC) only reduces tax liability for the cost of enrollment. Unlike the AOTC, the LLC will only cover the expenses of books and other such supplies if they are a requirement of enrollment. Both credits only cover expenses from post-secondary schools that participate in federal student aid programs.

Form 8863 asks for information about the students that the credit is being filed for, as well as information on your Modified Adjusted Gross Income (MAGI). This information is used in order to properly determine how much credit you qualify for a given tax year.

The 8863 form may be filed if you, your spouse, or a dependant you claim on your tax return was or currently is a student enrolled at an eligible educational institution and your MAGI as indicated in line 11 of Form 1040 or 1040-SR is less than $180,000 (for married couples filing jointly) or $90,000 (for single, widower, or heads of household). The school must also have issued Form 1098-T, or the tuition statement, to the student for whom the 8863 form will be filed.

There are also other prerequisites that must be fulfilled in order to be eligible for the AOTC and the LLC, and therefore should be kept in mind while filling out Form 8863.

AOTC eligibility requirements:

• The student must be pursuing a degree or other recognized educational credential
• The student must be enrolled at least half time for at least one academic period at the beginning of the tax year. (One academic period is defined by the IRS as semesters, trimesters, quarters, or any other period of study determined by the school)
• Not have finished the first four years of higher education at the beginning of a tax year, and not have claimed the AOTC or the former Hope credit for more than four tax years.
• Not have a felony drug conviction at the end of the year.

The LLC’s eligibility requirements, on the other hand, are comparatively lighter:

• Be enrolled or taking courses at an eligible educational institution.
• Be taking higher education courses in order to get a degree, recognized education credentials, or for job skills.
• Be enrolled for at least one academic period in the beginning of the tax year.

Finally, it is important to note that fulfilling Form 8863 and receiving the education credits may not require Form 1098-T under certain circumstances. If the school was not required to issue a Form 1098-T to the student, education credits can still be claimed if the student otherwise qualifies (see above requirements), can demonstrate that they were enrolled in an eligible educational institution, and substantiate the payment of tuition and other such related expenses.

Who needs to use Form 8863?

Parents and otherwise non-dependent students need to use Form 8863.

• Parents. In order to claim the education credit for the expenses incurred as part of their children’s education, Parents are a common user of Form 8863 for their children alongside their tax returns.

• Non-dependent Students. In the case of students who are not claimed as dependents on another person’s tax return, they must file Form 8863 themselves with their own tax returns.

How do I fill out Form 8863?

While the 8863 form may seem an intimidating form to accomplish due to the volume and length of information it requests, it is actually a very straightforward form provided that one has the necessary information prepared.

Form 8863 may be downloaded through the official IRS website. You must fully accomplish the form and attach it to your tax returns in order to avail of the educational credit.

Name and SSN

Enter your name and social security number as shown in your Form 1040 (Individual Income Tax Return).

Part 1

Line 1

Enter the total of all amounts from all Part III, American Opportunity Credit: Line 30 here.

Line 2

Enter $180,000 if married filing jointly, $90,000 if single, Head of Household, or a Qualifying Widow(er).

Line 3

Enter the amount from Line 11 of Form 1040 or 1040-SR. If you are filing Form 2555 or Form 4563, or are excluding income from Puerto Rico, consult Pub. 970 (Tax Benefits for Education) for the amount to enter here.

Line 4

Subtract Line 3 from Line 2 and enter the difference here. If the difference is zero or less, stop. You may not take any education credit.

Line 5

Enter $20,000 if married filing jointly, $10,000 if single, head of household, or qualifying widow(er).

Line 6

If Line 4 is equal to or more than Line 5, enter 1.000 here. If it is less than Line 5, divide Line 4 by Line 5 and enter the result here as a decimal rounded to the nearest 3 places.

Line 7

Multiply Line 1 by Line 6.

IMPORTANT NOTE: If you were under the age of 24 at the end of the year and meet the conditions described in the Form 8863 instructions, you cannot take American Opportunity Credit. Instead, skip Line 8, enter the amount from this line (Line 7) onto Line 9, and check the provided box.

Line 8

Multiply Line 7 by 0.40 (40%). Enter the amount here and on Line 29 of your Form 1040 or 1040-SR.

Part II

Line 9

Subtract Line 8 from Line 7. Enter the difference here and on Line 2 of the Credit Limit Worksheet (provided in the Form 8863 Instructions).

Line 10

Enter the total of all amounts from all Part III, Lifetime Learning Credit: Line 31 here. If the value is zero, skip lines 11 through 17, enter zero in Line 18, and proceed to Line 19.

Line 11

Enter the smaller of Line 10 or $10,000.

Line 12

Multiply Line 11 by 0.20 (20%).

Line 13

Enter: $138,000 if married filing jointly; $69,000 if single, head of household, or qualifying widow(er).

Line 14

Enter the amount from Line 11 of Form 1040 or 1040-SR. If you are filling Form 2555 or Form 4563, or are excluding income from Puerto Rico, consult Pub. 970 (Tax Benefits for Education) for the amount to enter here.

Line 15

Subtract Line 14 from Line 13. If the difference is 0 or less, skip Line 16 and 17, enter zero on Line 18, and proceed to Line 19.

Line 16

Enter: $20,000 if married filing jointly; $10,000 if single, head of household, or

qualifying widow(er).

Line 17

If Line 15 is equal to or more than Line 16, enter 1.000 here. Otherwise, divide Line 15 by Line 16, and enter the result here as a decimal rounded to at least three places.

Line 18

Multiply Line 12 by Line 17. Enter the product here and on Line 1 of the Credit Limit Worksheet (provided in the Form 8863 instructions).

Line 19

Enter the amount from Line 7 of the Credit Limit Worksheet (provided in the Form 8863 instructions) here and on Schedule 3 (Form 1040), Line 3.

Part III

IMPORTANT NOTE FOR PART III: Use and fulfill additional copies of Page 2 (Part III) as needed for each student for whom education credits are being claimed.

Line 20: Student Name

Enter the student’s complete name as indicated in the Dependents section of Form 1040.

Line 21: Social Security Number

Enter the student’s Social Security Number as indicated in the Dependents section of Form 1040.

Line 22: Educational Institution Information

Items a to 4a and b to 4b:

• Name and Address of Educational Institution

Enter the name and address of the Educational Institution(s) that issued the tuition receipt.

• Time Tuition Form was Issued

If the student has received Form 1098-T (Tuition) within the last tax year, check ‘Yes’. Otherwise, check ‘No’.

• Prerequisite Check

If Form 1098-T was received by the student and line 7 in Part I is checked, check ‘Yes”. Otherwise, check ‘No’.

• EIN of Institute

If you are claiming the AOTC or if you checked ‘Yes’ in either (2) or (3), enter the Employer Identification Number (EIN) of the educational institution in the space provided. The EIN of the institution can be found either from the institution itself, or on the 1098-T form.

Line 23

If the student has claimed the AOTC or the Hope Scholarship Credit within the last 4 years, check ‘Yes’ and proceed to Line 31. Otherwise, check ‘No’ and proceed to Line 24.

Line 24

If the student has been enrolled at least half-time for at least one academic period beginning in the past tax year in an eligible educational institution leading towards a postsecondary degree certificate, or other recognized post-secondary educational credential, check ‘Yes’ and proceed to Line 25. Otherwise, check ‘No’ and proceed to Line 31.

Line 25

If the student has completed the first years of postsecondary education before the last tax year, check ‘Yes’ and proceed to Line 31. Otherwise, check ‘No’ and proceed to Line 26.

Line 26

If the student has been convicted of felony drug possession within the last tax year, check ‘Yes’ and proceed to Line 31. Otherwise, check ‘No’ and proceed to the next step.

If at any point you were prompted to proceed to line 31, do NOT fill out lines 27 to 30.

American Opportunity Credit

Line 27

Enter your Adjusted, Qualified Education Expenses. Do not enter more than $4,000 here.

For assistance in calculating these, consult the Form 8863 instructions to find a worksheet for calculating Adjusted Qualified Education Expenses. For AOTC only, expenses for books, supplies and equipment the student needs for a course of study are included in qualified education expenses even if it is not paid to the school.

Line 28

Subtract $2000 from the value written on Line 27. If the difference is zero or less, enter 0 (zero).

Line 29

Multiply the value in Line 28 by 0.25 (25%).

Line 30

If Line 28 is equal to zero, enter the amount from Line 27. Otherwise, add $2,000 to the amount on Line 29 and enter the result here. Then skip Line 31 and proceed to Part 1, Line 1.

Line 31

Enter your Adjusted Qualified Education Expenses here, then proceed to Part 2, Line 10

Tips when filing Form W-9

As with all tax forms, it is important to exercise your due diligence in order to avoid any legal issues.

Keep your information safe

As tax form fraud is prevalent in this day and age, it is your responsibility to ensure that your personal information remains safe. The 8863 form contains sensitive information such as your Social Security Number, and therefore should not be left carelessly in public spaces. Make sure, as well, that you are sending these forms (remember that you will be submitting the 8863 form alongside your tax returns) through secure and trusted channels.

Answer Accurately

Make sure that the information that you put on the form is as accurate as possible, and make sure to review the form one or more times when you have finished accomplishing it, and ensure that all information given is updated. This will help you avoid any penalties or other legal issues.

You may apply more than one student for educational credit per 8863 form

So long as each student fulfills the requirements for the AOTC or LLC, you may copy Page 2 of the forms as needed for each student. Keep in mind, however, that a student cannot take both the AOTC and LLC credit within the same year.