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Qualifications for Forms 8863 and 8917

Tax Year 2012

Requirements Applicable to the Education Credits
To qualify for one of the credits, the taxpayer must meet all of the following requirements (See below for the individual qualifications of each credit and for the definitions of bolded words):
  1. Qualified education expenses of higher education must have been paid for an eligible student.
  2. The eligible student must be the taxpayer, the taxpayer's spouse, or a person of dependent status whom the taxpayer can claim as a dependent on his or her return.
  3. The taxpayer cannot file married filing separately.
  4. The taxpayer cannot be a nonresident alien for any part of the year who did not elect to be treated as a resident alien for tax purposes.
  5. The taxpayer cannot earn more than certain Modified Adjusted Gross Incomes as outlined in Forms 8863.
  6. The taxpayer cannot combine the credits for the qualified education expenses paid for any individual student.

See 2011 IRS Pub. 970, Tax Benefits for Education for more information and details.

Definitions Higher Education
A higher education is an education attained at any eligible educational institution, such as a college, university, vocational school, or other postsecondary educational institution eligible to participate in a student aid program administered by the U.S. Department of Education. The institution should be able to let the student or taxpayer know whether it meets this requirement.

 

Paid
Generally, expenses paid include those actually paid in the tax year for an academic period during that tax year, or for an academic period beginning in the first three months of the following year.

 

Qualified education expenses paid by the proceeds of a loan are considered paid by the taxpayer on the date(s) the payment is made to the educational institution, and not on the date(s) the loan is repaid. If the proceeds are paid directly from the lender to the educational institution, the expenses are considered paid on the date the institution credits the student's account.

 

Education expenses which are not refunded in the case the student withdraws from a class or classes are considered paid and qualified.

 

See dependent status below if the student paid his or her own expenses.

 

Academic Period
A semester, trimester, quarter, summer school session, or other period of study as reasonably determined by the educational institution. If the institution uses only credit hours or clock hours, the academic period is the payment period.

 

Eligible Student
The requirements for an eligible student vary according to the particular credit or deduction. See below for more details on each credit and the deduction.

 

Dependent Status
The requirements as to whether a taxpayer must claim a dependent, and whether an otherwise dependent student can take the credits or deduction varies. See below for more details on the credits and the deduction.

American Opportunity Credit
Qualifications The following qualifications must be met for eligibility by the taxpayer to claim the American Opportunity Credit:
  1. The qualified educational expenses must have been paid for a student in his or her first four years of postsecondary education.
  2. Neither the Hope Credit nor the American Opportunity Credit can have been claimed for this student in more than three previous years.
  3. The student must be pursuing an undergraduate degree or other recognized education credential.
  4. The eligible student must be enrolled at least half time for at least one academic period that begun during the tax year.
  5. The eligible student cannot have any felony drug convictions on his or her criminal record.
Lifetime Learning Credit
Qualification The following qualification must be met for eligibility by the taxpayer to claim the Lifetime Learning Credit:
  • The qualified educational expenses must have been paid for a student for all years of postsecondary education, including graduate school, and any courses to acquire or improve job skills.
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