Form 8863: Education Credits (American Opportunity and Lifetime Learning Credits)

Getting a higher education doesn’t come cheap. Fortunately, the IRS offers two education credits to help offset the cost: the American Opportunity Credit or the Lifetime Learning Credit. They can be claimed by the student or their parents if they’re still a dependent. Tax credits reduce the amount of income taxes you owe and, in some cases, can even boost your refund. If you’re a student hoping to claim an education credit, you’ll need to file Form 8863 with your tax return.

What is Form 8863 used for?

If you were enrolled at an eligible postsecondary educational institution and paid for qualified education expenses, you’ll use Form 8863 to claim your education credit.

What is the American Opportunity Credit?

The American Opportunity (AOTC) is for students (or parents) who paid for tuition, fees, books, and course-related supplies during the first four years of postsecondary education. The credit is worth up to $2,500 and is partially refundable. So, if the credit amount is more than the taxes you owe, you can receive up to $1,000 as a refund.

Who is eligible for the American Opportunity Credit?

You’re eligible for the AOTC if you’re:

  • Working towards a degree or other credential
  • Enrolled in a program at least part-time for one or more semesters
  • Still in the first four years of post-secondary education

You cannot claim the tax credit if you have a felony drug conviction.

What is the Lifetime Learning Credit?

The Lifetime Learning Credit is for tuition and fees paid to an eligible educational institution. You don’t have to be working towards a degree to claim the credit. Courses you take to acquire or improve your job skills also qualify. The Lifetime Learning credit is worth up to $2,000 per tax return and can be claimed for an unlimited number of years. However, you cannot claim the Lifetime Learning credit and AOTC for the same student in the same year.

Who is eligible for the Lifetime Learning Credit?

You’re eligible for the Lifetime Learning credit if you’re:

  • Working towards a degree or taking classes to improve your job skills
  • Enrolled or taking courses at an eligible educational institution for at least a semester

What are the income limits for education credits?

To claim the full credit for tax year 2023, your modified adjusted gross income (MAGI) must be $80,000 or less ($160,000 or less if married filing jointly). Once you earn between $80,000 and $90,000 ($160,000 and $180,000 for joint returns), your credit will be gradually reduced. Unfortunately, once your MAGI reaches $90,000 or more ($180,000 or more for joint returns), you no longer qualify for the credit.

How do you claim the education tax credit?

Once you receive your Form 1098-T, Tuition Statement from your school, you’ll use the information to do your taxes and complete Form 8863. You can file your Form 8863 with ezTaxReturn. It’s fast and ez because we guide you every step of the way. Most people can e-file in just 30 minutes.

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