What is 8863 IRS form?

IRS Form 8863 is a document designed to calculate and claim education credits. It is undoubtedly an indispensable help for all people who prioritize education, but at the same time strive to limit the cost of schooling.

In general, there are two tax credits for people who wish to obtain indemnity for post-secondary (higher) education. Those categories are as follows:

  • The American Opportunity Credit,
  • The Lifetime Learning Credit

Form 8863 Example

form 8863 example form 8863 irs

The following image depicts a standard 8863 form. The overall layout of the aforementioned form remains since years similar. A document itself is a beneficial tool for two groups of people — those who apply for the American Opportunity Credit which can be used by students throughout the time of undergraduate study and Lifetime Learning Credit that is characterized by more liberal restrictions and can be used also by students in graduate years.

The first part of the form is a section where one has to input personal details and contact information of an eligible educational organization at which one takes a course in a particular discipline. The second part of this form is designed to estimate an amount of Lifetime Learning Credit, whereas the third one — to calculate the total of American Opportunity Credit.

Why is worth filling in 8863 IRS form?

The aforementioned form is used to estimate and claim a precious education credit. It stands to reason that concrete numbers shed a brighter right on this issue. To put it briefly, the value of the American Opportunity Education Credit may reach a value of $ 2,500 whereas the Lifetime Learning Credit may amount up to $ 2,200.

For whom is form 8863 IRS helpful? Who can profit from an education credit?

Before filling in IRS 8863 one should ascertain whether he or she is entitled to receive a particular refund. A person can claim for the education credit if he/she or his/her spouse or dependent was enrolled at or attended an eligible education organization. The aforementioned organization should be a member of federal student aid program. The credits are derived from the amount of so-called qualified education expenses that were covered by the student in 2016 for academic periods commencing in 2016 and — what may be surprising — for the first three months of 2017. A full-time student under the age of 24 have a possibility to claim for a credit as long as no one else has reported him or her as a dependent, and he or she covered half of his or her support with merely earned income. In 8863 IRS parents may apply for a credit for their child provided that they report the child as dependent. Each dependent is allowed to receive a separate education credit. It is worth mentioning that if one is qualified for the American Opportunity Credit and the Lifetime Learning Credit for the same student of the same year, he or she has to choose only one type of available credit. It is obvious that counselors promote the better of the two education credits. Parent who covers so-called qualified education expenses can utilize another procedure, namely benefiting from the American Opportunity Credit and the Lifetime Learning Credit on a per-student, per-year arrangement.

Which educational institution enable their students to receive credits by completing 8863 form?

A notion of institution at which enrolled student can obtain a valuable credit is broad. It can be any type of college, vocational school, university or other post-secondary education entity that is entitled to join student aid program which is managed by U.S. Department of Education. It encompasses literally almost all public, privately-owned as well as nonprofit educational organizations of a post-secondary level. The relevant representative of an educational entity should be able to tell whether his or her institution is eligible for the above-mentioned program or not. It is also worth highlighting that some educational organizations overseas which are located outside the area of United States are also entitled to a student aid program conducted by U.S. Department of Education.

How can one benefit from submitting a form 8863?

The list of expenses that are refunded via credit is impressive. Furthermore, qualified education expenses which were paid in the name of the student are treated and proceeded as if they would have been paid by the student itself. On the other hand, qualified education expenses which are covered by a student who is a dependent, are treated like expenses of a person who makes a living of a student. This means that, for instance, a parent of a student can be acknowledged as having covered the expenses that have been financed with dependent’s earnings, inheritances and gifts.
When complementing IRS 8863 form it is worth remembering that both tuition and certain associated expenses that are necessary for enrollment and attendance at an eligible organization belong to acceptable qualified education expenses.