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Forms 8863 and 8917

Tax Year 2012

Education Credits
This worksheet is used to claim the American Opportunity and Lifetime Learning Credits.

 

Limitations on the Credits and Deduction
The following limitations apply for all of the education credits and deduction:

  1. An individual student is only eligible for one of the credits, however, the taxpayer, as a family, can combine the credits on one return if there is more than one student in the family. 
  2. The amount of the available credit is limited and possibly eliminated by the taxpayer's Modified Adjusted Gross Income (MAGI). 
  3. The taxpayer must have paid Qualified Education Expenses, including those paid by the proceeds of a loan, for an eligible student.
  4. Each credit has other Qualifications for Form 8863 that apply. 

 

Who Can Claim an Education Credit
If the taxpayer can claim the student as a dependent, then the taxpayer is the only person who can claim an education credit for that student. If the student cannot be claimed as a dependent on someone else's return, then only the student can claim the education credit. All qualified education expenses paid on behalf of the student by the taxpayer, the student, or a third party can be claimed by the person who is eligible to take the credit.

 

Who Cannot Claim a Credit
The following individuals are not eligible to take one of the credits even if all other requirements are met:

  • A taxpayer who is "Married filing separately,"
  • A taxpayer who is claimed as a dependent on someone else's return, or 
  • The taxpayer (or spouse if married) is a nonresident alien and elected to not be treated as a resident alien for tax purposes.

 

Additionally, if the taxpayer's adjusted gross income is above $90,000 or $180,000 for a joint return, then he or she is not eligible for any tax credit for the qualified education expenses paid during the tax year.

 

Distinctions Between the Two Credits:

American Opportunity Credit Lifetime Learning
  • Up to $2,500 credit per eligible student
  • Available for the first 4 years of postsecondary education
  • Available for 4 years per eligible student including any years the Hope credit was claimed
  • Student must be pursuing an undergraduate degree or other recognized educational credential
  • Student must be enrolled at least half time for at least one academic period
  • No felony drug conviction on student's record
  • Tuition and fees includes course-related books, supplies and equipment
  • Up to $2000 credit per return
  • Available for unlimited number of years
  • Student does not need to be pursuing a degree or other recognized educational credential
  • Student can be enrolled in as few as one course
  • Felony drug conviction rule does not apply
  • Tuition and fees includes only amounts required to be paid to institution providing education

 

See the IRS 2011 Instructions for Form 8863 for more details and information.

Directions
See the information above on running a trial to maximize the credit and/or deduction available to the taxpayer for qualified education expenses. Directions for entering the information into the Form 8863 are as follows:
Part I - Student Information and Expenses
Student Information Select the Student Name from the dropdown list.
Questions

Select "Yes" or "No" for the following questions:

  • Did student claim the Hope Credit or American Opporunity Credit in 4 prior tax years?
  • Was student enrolled at least half-time for one or more acedemic periods in a program leading towards a postsecondary degree, certificate, or other recognized postsecondary educational credential?
  • Did the student complete the first 4 yeras of post-secondary education before 2012?
  • Was student convicted, before the end of 2012, of a felony for possession or distribution of a controlled substance?
Expenses

Enter the amount of qualified expenses paid by the taxpayer during the tax year for the following:

  • Tuition
  • Required enrollment fees
  •  Course materials, such as books and laboratory equipment, required by the institution and bought at the educational institution.

See Qualified Education Expenses for details on qualified expenses.

Source of Money

Enter the amount of funding from each source of money for the qualified education expenses below:

  • Student's own money including loans and gifts
  • Parents or relatives
  • Tax-free assistance such as scholarships
  • Refunds related to any expenses above
  • Earnings from a QTP (Qualified Tuition Program) distribution
Educational Institution Information
School Information Enter the name of the school and the address. Enter the information for a second school, if applicable.  
Questions

Select "Yes" or "No" for the following questions:

  • Did this student receive a Form 1098-T from this institution for the tax yera?
  • Did this student receive a Form 1098-T from this institution for 2011 with Box 2 filled in and Box 7 checked?

If the answer to either question was "Yes", enter the federal ID number for the institution which can be found on the Form 1098-T.

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