How To Write Tax Form 8863 American Opportunity and Lifetime Learning Credits

Guide On Drafting Tax Form 8863 

You can be eligible for this tax credit if you have a Modified Adjusted Gross Income (MAGI) below $90,000. If you file jointly with your spouse, the MAGI must be below $180,000. Both credits cannot be claimed for one student. But you can claim the two credits for separate students. 

When filling out Form 8863, its instructions can be difficult to understand. But to help you out, here is a step-by-step guide:

1. Check for a Form 1098-T.

The first thing you need to do is to check for Form 1098-T Tuition Statement from your child’s school. If they were unable to give you one right away, you can request an electronic copy. 

Although there are some instances wherein this form is not needed, it’s best that you have it ready. This is because the IRS might ask questions. By having this form on hand, you can present it to them right away. 

2. Prepare the other necessary documents.

Other than Form 1098-T, you will need to prepare these documents when you are writing Form 8863:

• Your W2 or 1099: This information is needed to calculate your MAGI
• The institution’s Information: You will need to request the EIN (Employer Identification Number)
• Documentation of Qualified Expenses: Be diligent in keeping track of all the expenses you’ve paid for your child’s education

3. Enter the required information in Part III.

Write down the Student and Educational Institution information in Part 3. This is the part where you need to start when filling out this form. The necessary information that you need to include are:

• Line 20: Name of the student
• Line 21: Student’s Social Security Number
• Columns 22a and 22b: The institution’s name and full address

Line 23 will ask whether you have claimed the American Opportunity Credit or Hope Scholarship Credit in the past four years. If yes, you need to enter the details on Line 31. 

Another thing you have to remember is that Columns 22a and 22b have some questions about 1098-T. This is why you need to have it ready beforehand.

4. Accomplish the Refundable American Opportunity Credit details.

Now go back to Part 1 of Form 8863: The Refundable American Opportunity Credit and fill up this section. Lines 1 to 8 of 8863 form creation will ask you questions regarding your income. Here are some lines to pay attention to:

• Line 2: Write down your income
• Line 3: Write down the same amount on Line 38 of Form 1040
• Line 4: Write down the amount when you subtract
• Line 3 from Line 2

5. Include your Non-refundable Education credits.

When learning how to create IRS Form 8863, include the Non-refundable Education Credits in Part II. The amount is from Lines 8 and 7, and enter this on Line 9. The instructions to calculate these numbers will be given accordingly.