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2 0 09

Department of the Treasury

Internal Revenue Service

Instructions for Form 8863

Education Credits (American Opportunity, Hope, and Lifetime Learning Credits)

Midwestern disaster area may elect to continue to claim the

Section references are to the Internal Revenue Code unless

Hope credit for all students based on the previous Hope credit

otherwise noted.

rules.

General Instructions

Income limits increased for Hope and lifetime learning

credits. The amount of your tentative Hope and lifetime

learning credits for 2009 is gradually reduced (phased out) if

What’s New

your MAGI is between $50,000 and $60,000 ($100,000 and

American opportunity credit. This new education tax credit

$120,000 if you file a joint return). You cannot claim these

(a modification of the Hope credit) is available for 2009 and

credits if your MAGI is $60,000 or more ($120,000 or more if

2010. The maximum credit per student is $2,500 (100% of the

you file a joint return).

first $2,000 and 25% of the next $2,000 of qualified education

Purpose of Form

expenses). The credit is available for the first 4 years of

postsecondary education and 40% of the credit (up to $1,000)

Use Form 8863 to figure and claim your education credits,

is refundable for many taxpayers. The amount of your credit for

which are based on qualified education expenses paid to an

2009 is gradually reduced (phased out) if your modified

eligible postsecondary educational institution. For 2009, there

adjusted gross income (MAGI) is between $80,000 and $90,000

are three education credits.

•

($160,000 and $180,000 if you file a joint return). You cannot

The American opportunity credit, part of which may be

claim this credit if your MAGI is $90,000 or more ($180,000 or

refundable. Complete Parts I, IV, and V.

•

more if you file a joint return). Taxpayers with at least one

The Hope credit, which is nonrefundable and only for

student attending an eligible educational institution in a

taxpayers with at least one student attending an eligible

Table 1. Comparison of Education Credits

Caution. If you have more than one student eligible for the American opportunity credit or the Hope credit, you must claim the same

credit for all eligible students. You cannot claim both the American opportunity credit and the Hope credit on the same tax return.

However, you can claim both the American opportunity credit and the lifetime learning credit, or the Hope credit and the lifetime learning

credit on the same return — but not for the same student.

American Opportunity Credit – NEW

Hope Credit*

Lifetime Learning Credit

Maximum credit

Up to $2,500 credit per eligible student Up to $1,800 ($3,600 if a student in a

Up to $2,000 ($4,000 if a student in a

Midwestern disaster area) credit per

eligible student

return

Limit on modified

$180,000 if married filling jointly;

$120,000 if married filling jointly;

adjusted gross

$90,000 if single, head of household, or

$60,000 if single, head of household, or qualifying widow(er)

income (MAGI)

qualifying widow(er)

Refundable or

40% of credit may be refundable; the

Nonrefundable — credit limited to the amount of tax you must pay on your taxable

nonrefundable

rest is nonrefundable

income

Number of years

Available ONLY for the first 4 years of

Available ONLY for the first 2 years of

Available for all years of postsecondary

of postsecondary

postsecondary education

education and for courses to acquire or

education

improve job skills

Number of tax

Available ONLY for 4 tax years per

Available ONLY for 2 tax years per

Available for an unlimited number of

years credit

eligible student (including any year(s)

eligible student

years

available

Hope credit was claimed)

Type of degree

Student must be pursuing an undergraduate degree or other recognized education Student does not need to be pursuing a

required

credential

degree or other recognized education

credential

Number of

Student must be enrolled at least half time for at least one academic period

Available for one or more courses

courses

beginning during the year

Felony drug

No felony drug convictions on student’s records

Felony drug convictions are permitted

conviction

Qualified

Tuition and required enrollment fees.

Tuition and required enrollment fees (including amounts required to be paid to the

expenses

Course-related books, supplies, and

institution for course-related books, supplies, and equipment). Additional expenses

equipment do not need to be purchased allowed for students in Midwestern disaster areas.

from the institution in order to qualify.

Payments for

Payments made in 2009 for academic periods beginning in 2009 and in the first 3 months of 2010

academic periods

* You can claim the Hope credit only if at least one eligible student is attending an eligible educational institution in a Midwestern disaster area (see Table 2 on

page 6 for a list of qualifying disaster areas).

Cat. No. 53002G

Instructions For Form 8863 - Education Credits (American Opportunity, Hope, And Lifetime Learning Credits) - 2009

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