8863 Education Credits (Hope and Lifetime Learning Credits)

Form

8863

Department of the Treasury
Internal Revenue Service (99)

OMB No. 1545-0074

Education Credits
(Hope and Lifetime Learning Credits)
©

2008

See instructions to find out if you are eligible to take the credits.
© Attach to Form 1040 or Form 1040A.

Name(s) shown on return

Attachment
Sequence No.

50

Your social security number

Caution: ● You cannot take the Hope credit and the lifetime learning credit for the same student in the same year.
● You cannot take both an education credit and the tuition and fees deduction (see Form 8917) for the same
student for the same year.

Part I
1

Hope Credit. Caution: You cannot take the Hope credit for more than 2 tax years for the same student.
(a) Student’s name
(as shown on page 1
of your tax return)
First name
Last name

(b) Student’s
social security
number (as
shown on page 1
of your tax return)

(c) Qualified
expenses (see
instructions). Do
not enter more
than $2,400* for
each student.

(d) Enter the
smaller of the
amount in
column (c) or
$1,200**

(e) Add
column (c) and
column (d)

(f) Enter one-half
of the amount in
column (e)

*For each student who attended an eligible educational institution in a Midwestern disaster area, do not enter more than
$4,800.
**For each student who attended an eligible educational institution in a Midwestern disaster area, enter the smaller of the
amount in column (c) or $2,400.

2

Tentative Hope credit. Add the amounts on line 1, column (f). If you are taking the lifetime learning
©
credit for another student, go to Part II; otherwise, go to Part III

Part II

(a) Student’s name (as shown on page 1 of your tax return)

3
First name

(b) Student’s social security
number (as shown on page
1 of your tax return)

Last name

4 Add the amounts on line 3, column (c), and enter the total
5a Enter the smaller of line 4 or $10,000
b For students who attended an eligible educational institution in a Midwestern disaster area, enter
the smaller of $10,000 or their qualified expenses included on line 4 (see special rules on page 3)
c Subtract line 5b from line 5a
6a Multiply line 5b by 40% (.40)
b Multiply line 5c by 20% (.20)
c Tentative lifetime learning credit. Add lines 6a and 6b and go to Part III

Part III
7
8
9
10
11
12

13
14
15
16
17

2

Lifetime Learning Credit
(c) Qualified
expenses (see
instructions)

4
5a
5b
5c
6a
6b
6c

Allowable Education Credits

Tentative education credits. Add lines 2 and 6c
Enter: $116,000 if married filing jointly; $58,000 if single, head of household,
or qualifying widow(er)
Enter the amount from Form 1040, line 38,* or Form 1040A, line 22
Subtract line 9 from line 8. If zero or less, stop; you cannot take any
education credits
Enter: $20,000 if married filing jointly; $10,000 if single, head of household,
or qualifying widow(er)

7
8
9
10
11

If line 10 is equal to or more than line 11, enter the amount from line 7 on line 13 and go to
line 14. If line 10 is less than line 11, divide line 10 by line 11. Enter the result as a decimal
(rounded to at least three places)
©
Multiply line 7 by line 12
Enter the amount from Form 1040, line 46, or Form 1040A, line 28
Enter the total, if any, of your credits from Form 1040, lines 47 through 49, or Form 1040A, lines 29 and 30
©
Subtract line 15 from line 14. If zero or less, stop; you cannot take any education credits
Education credits. Enter the smaller of line 13 or line 16 here and on Form 1040, line 50, or Form
©
1040A, line 31

12
13
14
15
16

3 .

17

* If you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from Puerto Rico, see Pub. 970 for the amount to enter.

For Paperwork Reduction Act Notice, see page 4.

Cat. No. 25379M

Form

8863

(2008)

Form 8863 (2008)

General Instructions
What’s New
Hope credit increased. For 2008, the maximum amount of
the Hope credit has been increased to $1,800 ($3,600 for
students in Midwestern disaster areas).
Students in Midwestern disaster areas. For tax years
beginning in 2008 and 2009, the education credits are
expanded for students attending an eligible educational
institution in a Midwestern disaster area. See Special Rules for
Students in Midwestern Disaster Areas on page 3 and the
specific instructions for Parts I and II.

Purpose of Form
Use Form 8863 to figure and claim your education credits. The
education credits are:
● The Hope credit, and
● The lifetime learning credit.
These credits are based on qualified education expenses
paid to an eligible postsecondary educational institution. See
Qualified Education Expenses and Eligible Educational
Institution, later, for more information.

Who Can Take the Credits
You may be able to take the credits if you, your spouse, or a
dependent you claim on your tax return was a student enrolled
at or attending an eligible educational institution. The credits
are based on the amount of qualified education expenses paid
for the student in 2008 for academic periods beginning in
2008 and the first 3 months of 2009.

CAUTION

Qualified education expenses must be reduced by
any expenses paid directly or indirectly using
tax-free educational assistance. See Tax-Free
Educational Assistance and Refunds of Qualified
Education Expenses on this page.

Note. If a student is claimed as a dependent on another
person’s tax return, only the person who claims the student as
a dependent can claim the credits for the student’s qualified
education expenses. If a student is not claimed as a
dependent on another person’s tax return, only the student
can claim the credits.
Generally, qualified education expenses paid on behalf of
the student by someone other than the student (such as a
relative) are treated as paid by the student. However, qualified
education expenses paid (or treated as paid) by a student who
is claimed as a dependent on your tax return are treated as
paid by you. Therefore, you are treated as having paid
expenses that were paid from your dependent student’s
earnings, gifts, inheritances, savings, etc.
You cannot take the education credits if any of the following
apply.
● You are claimed as a dependent on another person’s tax
return, such as your parent’s return (but see the Note above).
● Your filing status is married filing separately.
● Your adjusted gross income on Form 1040, line 38, or Form
1040A, line 22, is (a) $116,000 or more if married filing jointly,
or (b) $58,000 or more if single, head of household, or
qualifying widow(er).
● You (or your spouse) were a nonresident alien for any part
of 2008 and the nonresident alien did not elect to be treated
as a resident alien.

Additional Information
See Pub. 970, Tax Benefits for Education, for more
information about these credits.

Page

2

Rules That Apply to Both Credits
Qualified Education Expenses
Generally, qualified education expenses are amounts paid in
2008 for tuition and fees required for the student’s enrollment
or attendance at an eligible educational institution. It does not
matter whether the expenses were paid in cash, by check, by
credit card, or with borrowed funds.
Qualified education expenses do not include amounts paid
for:
● Room and board, insurance, medical expenses (including
student health fees), transportation, or other similar personal,
living, or family expenses.
● Course-related books, supplies, equipment, and
nonacademic activities, except for amounts required to be
paid to the institution as a condition of enrollment or
attendance.
● Any course or other education involving sports, games, or
hobbies, or any noncredit course, unless such course or other
education is part of the student’s degree program or (for the
lifetime learning credit only) helps the student acquire or
improve job skills.
You should receive Form 1098-T, Tuition Statement, from
the college or university reporting either payments received in
box 1 or amounts billed in box 2. However, the amounts in
boxes 1 and 2 of Form 1098-T may be different than what you
actually paid. On Form 8863, lines 1 and 3, enter only the
amounts you paid in 2008 for qualified expenses. See
chapters 2 and 3 of Pub. 970.
If you or the student take a deduction for higher education
expenses, such as on Schedule A or Schedule C (Form 1040),
you cannot use those expenses when figuring your education
credits.
Any qualified expenses used to figure the
education credits cannot be taken into account in
determining the amount of a distribution from a
Coverdell ESA or a qualified tuition program that
CAUTION
is excluded from gross income. See Pub. 970,
chapter 7, for more information.

Tax-Free Educational Assistance and Refunds of
Qualified Education Expenses
Tax-free educational assistance includes a tax-free
scholarship or Pell grant or tax-free employer-provided
educational assistance. See Pub. 970 for specific information.
You must reduce the total of your qualified education
expenses by any tax-free educational assistance and by any
refunds of your expenses. If the refund or tax-free assistance
is received in the same year in which the expenses were paid
or in the following year before you file your tax return, reduce
your qualified education expenses by the amount received
and figure your education credits using the reduced amount of
qualified expenses. If the refund or tax-free assistance is
received after you file your return for the year in which the
expenses were paid, you must recapture the excess credit.
You do this by figuring the amount by which your education
credits would have been reduced if the refund or tax-free
assistance had been received in the year for which you
claimed the education credits. Include that amount as an
additional tax for the year the refund or tax-free assistance
was received.
Example. You paid $8,000 tuition and fees in December
2007, and your child began college in January 2008. You filed
your 2007 tax return on February 2, 2008, and claimed a
lifetime learning credit of $1,600 ($8,000 qualified expenses
paid x .20). After you filed your return, your child dropped two
courses and you received a refund of $1,400.

Form 8863 (2008)

You must refigure your 2007 lifetime learning credit using
$6,600 ($8,000 qualified expenses - $1,400 refund). The
refigured credit is $1,320. You must include the difference of
$280 ($1,600 credit originally claimed - $1,320 refigured
credit) on your 2008 Form 1040, line 44, or Form 1040A, line
28. Also, enter “$280” and “ECR” on the dotted line next to
line 44 (if filing Form 1040) or line 28 (Form 1040A).

Prepaid Expenses
Qualified education expenses paid in 2008 for an academic
period that begins in the first 3 months of 2009 can be used
only in figuring your 2008 education credits. For example, if
you pay $2,000 in December 2008 for qualified tuition for the
2009 winter quarter that begins in January 2009, you can use
that $2,000 in figuring your 2008 education credits (if you meet
all the other requirements).
You cannot use any amount paid in 2007 or 2009
to figure your 2008 education credits.
CAUTION

Eligible Educational Institution
An eligible educational institution is generally any accredited
public, nonprofit, or proprietary (private) college, university,
vocational school, or other postsecondary institution. Also, the
institution must be eligible to participate in a student aid
program administered by the Department of Education.
Virtually all accredited postsecondary institutions meet this
definition.

Special Rules for Students in Midwestern
Disaster Areas
The following rules apply only to students attending an eligible
educational institution in a Midwestern disaster area in the
states of Arkansas, Illinois, Indiana, Iowa, Missouri, Nebraska,
and Wisconsin. See Table 1 on page 4 for the eligible
counties.
All of the other rules discussed on pages 2 through 4 (as
modified by these rules) must still be met.
The Hope credit for students in Midwestern disaster areas is
100% of the first $2,400 of qualified education expenses and
50% of the next $2,400 of qualified education expenses for a
maximum credit of $3,600 per student. The lifetime learning
credit rate for students in Midwestern disaster areas is 40%.
The definition of qualified education expenses is expanded
for students in Midwestern disaster areas. In addition to tuition
and fees required for enrollment or attendance at an eligible
educational institution, qualified education expenses for
students in Midwestern disaster areas include the following.
1. Books, supplies, and equipment required for enrollment
or attendance at an eligible educational institution.
2. For a special needs student, expenses that are necessary
for that person’s enrollment or attendance at an eligible
educational institution.
3. For a student who is at least a half-time student, the
reasonable costs of room and board, but only to the extent
that the costs are not more than the greater of the following
two amounts.
a. The allowance for room and board, as determined by the
eligible educational institution, that was included in the cost of
attendance (for federal financial aid purposes) for a particular
academic period and living arrangement of the student.
b. The actual amount charged if the student is residing in
housing owned or operated by the eligible educational
institution.
You will need to contact the eligible educational institution
for qualified room and board costs.

Page

3

Specific Instructions
Part I
Hope Credit
You may be able to take a credit of up to $1,800 ($3,600 if a
student in a Midwestern disaster area) for qualified education
expenses (defined earlier) paid for each student who qualifies
for the Hope credit. The Hope credit equals 100% of the first
$1,200 ($2,400 if a student in a Midwestern disaster area) and
50% of the next $1,200 ($2,400 if a student in a Midwestern
disaster area) of qualified expenses paid for each eligible
student. You can take the Hope credit for a student if all of the
following apply.
● As of the beginning of 2008, the student had not completed
the first 2 years of postsecondary education (generally, the
freshman and sophomore years of college), as determined by
the eligible educational institution. For this purpose, do not
include academic credit awarded solely because of the
student’s performance on proficiency examinations.
● The student was enrolled in 2008 in a program that leads to
a degree, certificate, or other recognized educational
credential.
● The student was taking at least one-half the normal full-time
workload for his or her course of study for at least one
academic period beginning in 2008.
● The Hope credit was not claimed for that student’s
expenses in more than one prior tax year.
● The student has not been convicted of a felony for
possessing or distributing a controlled substance.

TIP

If a student does not meet all of the above
conditions, you may be able to take the lifetime
learning credit for part or all of that student’s
qualified education expenses instead.

Line 1
Complete columns (a) through (f) on line 1 for each student
who qualifies for and for whom you elect to take the Hope
credit.
Note. If you have more than three students who qualify for the
Hope credit, enter “See attached” next to line 1 and attach a
statement with the required information for each additional
student. Include the amounts from line 1, column (f), for all
students in the total you enter on line 2.
Column (c). For each student, enter the amount of qualified
education expenses remaining after reduction by certain
tax-free amounts and refunds, as explained earlier. The
expenses must have been paid for the student in 2008 for
academic periods beginning after 2007 but before April 1,
2009, as explained earlier under Prepaid Expenses. If the
student’s expenses are more than $2,400 ($4,800 if a student
in a Midwestern disaster area), enter $2,400 ($4,800 if a
student in a Midwestern disaster area). You may use the
worksheet that follows to figure the correct amount to enter in
column (c).
Qualified Education Expenses Worksheet for Column (c)
(Do a separate worksheet for each student)
1. Total qualified education expenses
2. Less adjustments:
a. Tax-free educational assistance
b. Refunds of qualified education
expenses
c. Other adjustments (see Pub.
970)
3. Total adjustments (add lines 2a–2c)
4. Qualified education expenses (subtract line
3 from line 1). Enter here and on Form
8863, Part I or II, column (c)

Form 8863 (2008)

Page

Part II
Lifetime Learning Credit
The lifetime learning credit equals 20% of qualified expenses
paid, up to a maximum of $10,000 of qualified expenses per
return. Therefore, the maximum lifetime learning credit you
can claim on your return for the year is $2,000, regardless of
the number of students for whom you are claiming the credit.
For students in Midwestern disaster areas, this is modified
to 40% of qualified expenses paid, with a maximum lifetime
learning credit allowed on your return of $4,000. If you are
claiming a lifetime learning credit for both students in
Midwestern disaster areas and other students, the qualified
education expenses taken into account in Part II for other
students cannot exceed $10,000 reduced by the qualified
education expenses of students in the Midwestern disaster
areas.

CAUTION

You cannot take the lifetime learning credit for any
student for whom you are taking the Hope credit
in the same tax year.

Line 3
Complete columns (a) through (c) for each student for whom
you are taking the lifetime learning credit.
Note. If you are taking the lifetime learning credit for more
than three students, enter “See attached” next to line 3 and
attach a statement with the required information for each
additional student. Include the amounts from line 3, column
(c), for all students in the total you enter on line 4.

4

Column (c). For each student, enter the amount of qualified
education expenses remaining after reduction by certain
tax-free amounts and refunds, as explained earlier. The
expenses must have been paid for the student in 2008 for
academic periods beginning after 2007 but before April 1,
2009, as explained earlier under Prepaid Expenses. You may
use the worksheet on page 3 to figure the correct amount to
enter in column (c).
Paperwork Reduction Act Notice. We ask for the information
on this form to carry out the Internal Revenue laws of the
United States. You are required to give us the information. We
need it to ensure that you are complying with these laws and
to allow us to figure and collect the right amount of tax.
You are not required to provide the information requested
on a form that is subject to the Paperwork Reduction Act
unless the form displays a valid OMB control number. Books
or records relating to a form or its instructions must be
retained as long as their contents may become material in the
administration of any Internal Revenue law. Generally, tax
returns and return information are confidential, as required by
Internal Revenue Code section 6103.
The average time and expenses required to complete and
file this form will vary depending on individual circumstances.
For the estimated averages, see the instructions for your
income tax return.
If you have suggestions for making this form simpler, we
would be happy to hear from you. See the instructions for your
income tax return.

Table 1
The special rules for students in Midwestern disaster areas apply to those attending an eligible educational institution located in the
following counties.
Applicable
Disaster Date*

State

Affected Counties —Midwestern Disaster Areas

05/02/2008

Arkansas

Arkansas, Benton, Cleburne, Conway, Crittenden, Grant, Lonoke, Mississippi, Phillips, Pulaski, Saline,
and Van Buren.

06/01/2008

Illinois

Adams, Calhoun, Clark, Coles, Crawford, Cumberland, Douglas, Edgar, Hancock, Henderson, Jasper,
Jersey, Lake, Lawrence, Mercer, Rock Island, Whiteside, and Winnebago.

06/06/2008

Indiana

Adams, Bartholomew, Brown, Clay, Daviess, Dearborn, Decatur, Gibson, Grant, Greene, Hamilton,
Hancock, Hendricks, Henry, Huntington, Jackson, Jefferson, Jennings, Johnson, Knox, Lawrence,
Madison, Marion, Monroe, Morgan, Owen, Parke, Pike, Posey, Putnam, Randolph, Ripley, Rush, Shelby,
Sullivan, Tippecanoe, Vermillion, Vigo, Washington, and Wayne.

05/25/2008

Iowa

Adair, Adams, Allamakee, Appanoose, Audubon, Benton, Black Hawk, Boone, Bremer, Buchanan, Butler,
Cass, Cedar, Cerro Gordo, Chickasaw, Clarke, Clayton, Clinton, Crawford, Dallas, Davis, Decatur,
Delaware, Des Moines, Dubuque, Fayette, Floyd, Franklin, Fremont, Greene, Grundy, Guthrie, Hamilton,
Hancock, Hardin, Harrison, Henry, Howard, Humboldt, Iowa, Jackson, Jasper, Johnson, Jones, Keokuk,
Kossuth, Lee, Linn, Louisa, Lucas, Madison, Mahaska, Marion, Marshall, Mills, Mitchell, Monona,
Monroe, Montgomery, Muscatine, Page, Polk, Pottawattamie, Poweshiek, Ringgold, Scott, Story, Tama,
Union, Van Buren, Wapello, Warren, Washington, Webster, Winnebago, Winneshiek, Worth, and Wright.

05/10/2008

Missouri

Barry, Jasper, and Newton.

06/01/2008

Missouri

Adair, Andrew, Callaway, Cass, Chariton, Clark, Gentry, Greene, Harrison, Holt, Johnson, Lewis, Lincoln,
Linn, Livingston, Macon, Marion, Monroe, Nodaway, Pike, Putnam, Ralls, St. Charles, Stone, Taney,
Vernon, and Webster.

05/22/2008

Nebraska

Buffalo, Butler, Colfax, Custer, Dawson, Douglas, Gage, Hamilton, Holt, Jefferson, Kearney, Lancaster,
Platte, Richardson, Sarpy, and Saunders.

06/05/2008

Wisconsin

Adams, Calumet, Crawford, Columbia, Dane, Dodge, Fond du Lac, Grant, Green, Green Lake, Iowa,
Jefferson, Juneau, Kenosha, La Crosse, Manitowoc, Marquette, Milwaukee, Monroe, Ozaukee, Racine,
Richland, Rock, Sauk, Sheboygan, Vernon, Walworth, Washington, Waukesha, and Winnebago.

* In some cases, the date will be later due to the continuation of the severe storms, tornadoes, or flooding that began on the above
date. For more details, go to www.fema.gov.