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Example. You paid $8,000 tuition and fees in December

1. Books, supplies, and equipment required for enrollment or

2008 for your child’s spring semester beginning in January

attendance at an eligible educational institution.

2009. You filed your 2008 tax return on February 2, 2009, and

2. For a special needs student, expenses that are necessary

claimed a lifetime learning credit of $1,600 ($8,000 qualified

for that person’s enrollment or attendance at an eligible

expenses paid x .20). After you filed your return, your child

educational institution.

dropped two courses and you received a refund of $1,400.

3. For a student who is at least a half-time student, the

reasonable costs of room and board, but only to the extent

You must refigure your 2008 lifetime learning credit using

$6,600 ($8,000 qualified expenses − $1,400 refund). The

that the costs are not more than the greater of the following

two amounts.

refigured credit is $1,320. You must include the difference of

$280 ($1,600 credit originally claimed − $1,320 refigured credit)

a. The allowance for room and board, as determined by the

eligible educational institution, included in the cost of

on your 2009 Form 1040, line 44, or Form 1040A, line 28. Also,

enter “$280” and “ECR” in the space next to line 44 (if filing

attendance (for federal financial aid purposes) for a

Form 1040) or line 28 (Form 1040A).

particular academic period and living arrangement of the

student.

Prepaid Expenses

b. The actual amount charged if the student is residing in

Qualified education expenses paid in 2009 for an academic

housing owned or operated by the eligible educational

period that begins in the first 3 months of 2010 can be used

institution.

only in figuring your 2009 education credits. For example, if you

You will need to contact the eligible educational institution for

pay $2,000 in December 2009 for qualified tuition for the 2010

qualified room and board costs.

winter quarter that begins in January 2010, you can use that

$2,000 in figuring your 2009 education credits (if you meet all

Additional Information

the other requirements).

See Pub. 970, chapters 2, 3, and 4, for more information about

You cannot use any amount paid in 2008 or 2010 to

these credits.

figure your 2009 education credit(s).

CAUTION

Specific Instructions

Eligible Educational Institution

Part I

An eligible educational institution is generally any accredited

American Opportunity Credit

public, nonprofit, or proprietary (private) college, university,

vocational school, or other postsecondary institution. Also, the

You may be able to take a credit of up to $2,500 for qualified

institution must be eligible to participate in a student aid

education expenses (defined earlier) paid for each student who

program administered by the Department of Education. Virtually

qualifies for the American opportunity credit. This credit equals

all accredited postsecondary institutions meet this definition.

100% of the first $2,000 and 25% of the next $2,000 of qualified

expenses paid for each eligible student. The amount of your

credit for 2009 is gradually reduced (phased out) if your MAGI

Special Rules for Students in

is between $80,000 and $90,000 ($160,000 and $180,000 if

Midwestern Disaster Areas

you file a joint return). You cannot claim a credit if your MAGI is

$90,000 or more ($180,000 or more if you file a joint return).

The following rules apply only to students attending an eligible

educational institution in a Midwestern disaster area in the

Student qualifications. Generally, you can take the American

states of Arkansas, Illinois, Indiana, Iowa, Missouri, Nebraska,

opportunity credit for a student if all of the following apply.

•

and Wisconsin. See Table 2 on page 6 for the eligible counties.

As of the beginning of 2009, the student had not completed

the first 4 years of postsecondary education (generally, the

All of the other rules discussed on pages 2 through 5 (as

freshman through senior years of college), as determined by

modified by these rules) must still be met.

the eligible educational institution. For this purpose, do not

include academic credit awarded solely because of the

The Hope credit for students in Midwestern disaster areas is

student’s performance on proficiency examinations.

100% of the first $2,400 of qualified education expenses and

•

The student was enrolled in 2009 in a program that leads to a

50% of the next $2,400 of qualified education expenses for a

degree, certificate, or other recognized educational credential.

maximum credit of $3,600 per student. Complete Parts II and V

•

The student was taking at least one-half the normal full-time

of Form 8863 to figure the increased Hope credit. The

workload for his or her course of study for at least one

maximum lifetime learning credit for students in Midwestern

academic period beginning in 2009.

disaster areas is $4,000 per return. Complete Parts III and V of

•

The student has not been convicted of a felony for

Form 8863 to figure the credit using the higher rate. There are

possessing or distributing a controlled substance.

no increases for the American opportunity credit when claimed

In addition, you cannot be claiming a Hope credit in Part II of

for students in Midwestern disaster areas.

Form 8863 for any student in 2009.

The definition of qualified education expenses is expanded

If all of the above conditions are not met, you may be

for students in Midwestern disaster areas. In addition to tuition

TIP

able to take the lifetime learning credit for part or all of

and fees required for enrollment or attendance at an eligible

that student’s qualified education expenses instead.

educational institution, qualified education expenses for

students in Midwestern disaster areas include the following.

-3-

Instructions For Form 8863 - Education Credits (American Opportunity, Hope, And Lifetime Learning Credits) - 2009 Page 3

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