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educational institution in a Midwestern disaster area who elect

Qualified Education Expenses

not to claim the American opportunity credit for any student.

Generally, qualified education expenses are amounts paid in

Complete Parts II and V.

•

2009 for tuition and fees required for the student’s enrollment or

The lifetime learning credit, which is nonrefundable.

attendance at an eligible educational institution. It does not

Complete Parts III and V.

matter whether the expenses were paid in cash, by check, by

A refundable credit can give you a refund for any part of the

credit card, or with borrowed funds.

credit that is more than your total tax. A nonrefundable credit

Only certain expenses for course-related books, supplies,

can reduce your tax, but any excess is not refunded to you.

and equipment qualify.

Each of these credits has different rules that can affect your

•

American opportunity credit: Qualified education expenses

eligibility to claim a specific credit. These differences are shown

include amounts spent on books, supplies, and equipment

in Table 1 on page 1.

needed for a course of study, whether or not the materials are

purchased from the educational institution as a condition of

You may be able to take the tuition and fees deduction

enrollment or attendance.

TIP

for you, your spouse, or a dependent, instead of an

•

Hope and lifetime learning credits: Qualified education

education credit. Figure your tax both ways and choose

expenses include only amounts for books, supplies, and

the one that gives you the lower tax. See Form 8917, Tuition

equipment required to be paid to the institution as a condition of

and Fees Deduction, and chapter 7 of Pub. 970, Tax Benefits

enrollment or attendance.

for Education, for more information about the tuition and fees

deduction.

Qualified education expenses do not include amounts paid

for:

•

Who Can Claim an Education Credit

Room and board, insurance, medical expenses (including

student health fees), transportation, or other similar personal,

You may be able to claim an education credit if you, your

living, or family expenses.

spouse, or a dependent you claim on your tax return was a

•

Any course or other education involving sports, games, or

student enrolled at or attending an eligible educational

hobbies, or any noncredit course, unless such course or other

institution. The credits are based on the amount of qualified

education is part of the student’s degree program or (for the

education expenses paid for the student in 2009 for academic

lifetime learning credit only) helps the student acquire or

periods beginning in 2009 and in the first 3 months of 2010.

improve job skills.

•

Qualified education expenses must be reduced by any

Nonacademic fees, such as student activity fees, athletic

expenses paid directly or indirectly using tax-free

fees, insurance expenses, or other expenses unrelated to the

educational assistance. See Tax-Free Educational

academic course of instruction.

CAUTION

Assistance and Refunds of Qualified Education Expenses on

But see Special Rules for Students in Midwestern Disaster

this page.

Areas, on the next page, for certain exceptions.

Who can claim a dependent’s expenses. If a student is

You should receive Form 1098-T, Tuition Statement, from

claimed as a dependent on another person’s tax return, only the

the college or university reporting either payments received in

person who claims the student as a dependent can claim a

2009 (box 1) or amounts billed in 2009 (box 2). However, the

credit for the student’s qualified education expenses. If a

amounts in boxes 1 and 2 of Form 1098-T may be different than

student is not claimed as a dependent on another person’s tax

what you actually paid. On Form 8863, lines 1, 3, and 5, enter

return, only the student can claim a credit.

only the amounts you paid in 2009 for qualified expenses. See

Generally, qualified education expenses paid on behalf of

chapters 2, 3, and 4 of Pub. 970 for more information on Form

the student by someone other than the student (such as a

1098-T.

relative) are treated as paid by the student. However, qualified

If you or the student takes a deduction for higher education

education expenses paid (or treated as paid) by a student who

expenses, such as on Schedule A or Schedule C (Form 1040),

is claimed as a dependent on your tax return are treated as

you cannot use those same expenses when figuring your

paid by you. Therefore, you are treated as having paid

education credits.

expenses that were paid from your dependent student’s

Any qualified expenses used to figure the education

earnings, gifts, inheritances, savings, etc.

credits cannot be taken into account in determining the

Who cannot claim a credit. You cannot take an education

amount of a distribution from a Coverdell ESA or a

CAUTION

credit if any of the following apply.

qualified tuition program (section 529 plan) that is excluded

from gross income. See Pub. 970, chapters 8 and 9, for more

1. You are claimed as a dependent on another person’s tax

information.

return, such as your parent’s return.

Tax-Free Educational Assistance and Refunds

2. Your filing status is married filing separately.

of Qualified Education Expenses

3. You (or your spouse) were a nonresident alien for any part

of 2009 and did not elect to be treated as a resident alien.

Tax-free educational assistance includes a tax-free scholarship

4. Your MAGI is one of the following.

or Pell grant or tax-free employer-provided educational

a. American opportunity credit: $180,000 or more if married

assistance. See chapter 1 of Pub. 970 for specific information.

filing jointly, or $90,000 or more if single, head of

For all credits, you must reduce the total of your qualified

household, or qualifying widow(er).

education expenses by any tax-free educational assistance and

b. Hope and lifetime learning credits: $120,000 or more if

by any refunds of your expenses. If the refund or tax-free

married filing jointly, or $60,000 or more if single, head of

assistance is received in the same year in which the expenses

household, or qualifying widow(er).

were paid or in the following year before you file your tax return,

simply reduce your qualified education expenses by the amount

There are a number of factors, such as your filing status,

received and figure your education credits using the reduced

TIP

your MAGI, and whether you are subject to the

amount of qualified expenses. If the refund or tax-free

alternative minimum tax, that will affect the amount of

assistance is received after you file your return for the year in

any education credit you are eligible to claim. When you figure

which the expenses were paid, you must recapture (repay) the

your taxes, you may want to compare the different education

excess credit. You do this by figuring the amount by which your

credits in order to choose the method(s) that gives you the

education credits would have been reduced if the refund or

lowest tax liability. If you qualify, you may find that a

tax-free assistance had been received in the year for which you

combination of credit(s) and other education benefit(s) gives

claimed the education credits. Include that amount as an

you the lowest tax. See Pub. 970 for information on other

additional tax for the year the refund or tax-free assistance was

benefits.

received.

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Instructions For Form 8863 - Education Credits (American Opportunity, Hope, And Lifetime Learning Credits) - 2009 Page 2

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