What is Form 8863 Education Credits?
Form 8863 allows you to claim your education credits. You may be eligible for these credits for any expenses from your post-secondary or college costs.
There are two credits available: the American Opportunity Credit and the Lifetime Learning Credit.
What is the difference between the American Opportunity and Lifetime Learning Credits?
The American Opportunity credit:
- The American Opportunity Credit  is refundable , which means you can receive a refund if the credit is more than your total tax.
- You can receive up to $2,500 per student.
- You qualify for this credit only for the first four years of post-secondary education.
- You cannot claim the American Opportunity credit more than 4 years in a row for the same student.
- You must be pursuing a degree for this credit. You also must be enrolled at least half time for at least one academic period.
- You are not eligible if you have been convicted of a felony for possessing or distributing a controlled substance.
The Lifetime Learning Credit:
- It is nonrefundable , which means if you qualify for it, it can reduce your tax to zero, but any excess is not given to you.
- You can receive up to $2,000 per return.
- You qualify for this credit all the years of post-secondary education including any courses to improve job skills. You do not need to be pursuing a degree.
What are qualified educational expenses?
You can claim tuition, required enrollment fees, and course materials.
When do you use Form 8863?
- You can claim an education tax credit if you, your spouse, or any dependents you claim  on your tax return attended an eligible educational institute that year.
- You cannot claim both the American Opportunity credit and the Lifetime Learning Credit for the same student in the same year.
- You can’t take both an education credit and the tuition & fees deduction (Form 8917)  for the same student for the same year.
You can find the Form 8863  at the IRS.