8863 Instr

2020

Instructions for Form 8863

Department of the Treasury
Internal Revenue Service

Education Credits (American Opportunity and Lifetime Learning Credits)

General Instructions
Section references are to the Internal Revenue Code unless
otherwise noted.

Future Developments

For the latest information about developments related to Form
8863 and its instructions, such as legislation enacted after they
were published, go to IRS.gov/Form8863.

What's New
Limits on modified adjusted gross income (MAGI). The
lifetime learning credit MAGI limit increases to $138,000 if you're
married filing jointly ($69,000 if you're filing single, head of
household, or qualifying widow(er)). The American opportunity
credit MAGI limits remain unchanged. See Table 1 and the
instructions for line 3 or line 14.

Reminders
Form 1098-T requirement. To be eligible to claim the
American opportunity credit or the lifetime learning credit, the
law requires a taxpayer (or a dependent) to have received Form
1098-T, Tuition Statement, from an eligible educational
institution, whether domestic or foreign.
However, you may claim one of these education benefits if
the student doesn't receive a Form 1098-T because the
student’s educational institution isn't required to furnish a Form
1098-T to the student under existing rules (for example, if the
student is a qualified nonresident alien, has certain qualified
education expenses paid entirely with scholarships, has certain
qualified education expenses paid under a formal billing
arrangement, or is enrolled only in courses for which no
academic credit is awarded). If a student’s educational institution
isn't required to provide a Form 1098-T to the student, you may
claim one of these education benefits without a Form 1098-T if
you otherwise qualify, can demonstrate that you (or a
dependent) were enrolled at an eligible educational institution,
and can substantiate the payment of qualified tuition and related
expenses.
You may also claim one of these educational benefits if the
student attended an eligible educational institution required to
furnish Form 1098-T but the student doesn't receive Form
1098-T before you file your tax return (for example, if the
institution is otherwise required to furnish the Form 1098-T and
doesn't furnish it or refuses to do so) and you take the following
required steps: After February 1, 2021, but before you file the
return, you or the student must request that the educational
institution furnish a Form 1098-T. You must fully cooperate with
the educational institution's efforts to gather the information
needed to furnish the Form 1098-T. You must also otherwise
qualify for the benefit, be able to demonstrate that you (or a
dependent) were enrolled at an eligible educational institution,
and substantiate the payment of qualified tuition and related
expenses.
The amount of qualified tuition and related expenses reported
on Form 1098-T may not reflect the total amount of the qualified
tuition and related expenses paid during the year for which you
may claim an education tax credit. You may include qualified
Dec 14, 2020

tuition and related expenses that are not reported on Form
1098-T when claiming one of the related credits if you can
substantiate payment of these expenses.You may not include
expenses paid on the Form 1098-T that have been paid by
qualified scholarships, including those that were not processed
by the universities.
Form 2555-EZ will no longer be available beginning with
tax year 2019. You will file Form 1040 or 1040-SR; all
references to these instructions have been revised accordingly.
If you need to file a prior year tax return, use the form and
instructions revision for that tax year.
To claim the American opportunity credit, you must
provide the educational institution’s employer
CAUTION identification number (EIN) on your Form 8863. You
should be able to get this information from Form 1098-T or the
educational institution.

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Ban on claiming the American opportunity credit. If you
claim the American opportunity credit even though you're not
eligible, you may be banned from claiming the credit for 2 or 10
years depending on your conduct. See the Caution statement
under American Opportunity Credit, later.
Taxpayer identification number (TIN) needed by due date
of return. If you haven’t been issued a TIN by the due date of
your 2020 return (including extensions), you can’t claim the
American opportunity credit on either your original or an
amended 2020 return. Also, the American opportunity credit isn’t
allowed on either your original or an amended 2020 return for a
student who hasn’t been issued a TIN by the due date of your
2020 return (including extensions).
Form 8862 may be required. If your American opportunity
credit was denied or reduced for any reason other than a math
or clerical error for any tax year beginning after 2015, you must
attach a completed Form 8862, Information To Claim Certain
Refundable Credits After Disallowance, to your tax return for the
next tax year for which you claim the credit. See Form 8862 and
its instructions for details.

Purpose of Form

Use Form 8863 to figure and claim your education credits, which
are based on adjusted qualified education expenses paid to an
eligible educational institution (postsecondary). For 2020, there
are two education credits.
• The American opportunity credit, part of which may be
refundable.
• The lifetime learning credit, which is nonrefundable.
A refundable credit can give you a refund when the credit is
more than the tax you owe, even if you aren’t required to file a
tax return. A nonrefundable credit can reduce your tax, but any
excess isn't refunded to you.
Both of these credits have different rules that can affect your
eligibility to claim a specific credit. These differences are shown
in Table 1.

Cat. No. 53002G

Table 1. Comparison of Education Credits for 2020
Caution. You can claim both the American opportunity credit and the lifetime learning credit on the same
return, but not for the same student.
American Opportunity Credit

Lifetime Learning Credit

Maximum credit

Up to $2,500 credit per eligible student

Up to $2,000 credit per return

Limit on modified
adjusted gross income
(MAGI)

$180,000 if married filing jointly;
$90,000 if single, head of household, or qualifying
widow(er)

$138,000 if married filing jointly;
$69,000 if single, head of household, or qualifying
widow(er)

Refundable or
nonrefundable

40% of credit may be refundable; the rest is
nonrefundable

Nonrefundable—credit limited to the amount of tax you
must pay on your taxable income

Number of years of
postsecondary education

Available ONLY if the student had not completed the first
4 years of postsecondary education before 2020

Available for all years of postsecondary education and for
courses to acquire or improve job skills

Number of tax years
credit available

Available ONLY for 4 tax years per eligible student
(including any year(s) Hope scholarship credit was
claimed)

Available for an unlimited number of tax years

Type of program required

Student must be pursuing a program leading to a degree
or other recognized education credential

Student doesn't need to be pursuing a program leading
to a degree or other recognized education credential

Number of courses

Student must be enrolled at least half-time for at least
one academic period beginning during 2020 (or the first
3 months of 2021 if the qualified expenses were paid in
2020)

Available for one or more courses

Felony drug conviction

As of the end of 2020, the student had not been
convicted of a felony for possessing or distributing a
controlled substance

Felony drug convictions don't make the student ineligible

Qualified expenses

Tuition, required enrollment fees, and course materials
that the student needs for a course of study whether or
not the materials are bought at the educational institution
as a condition of enrollment or attendance

Tuition and required enrollment fees (including amounts
required to be paid to the institution for course-related
books, supplies, and equipment)

Payments for academic
periods

Payments made in 2020 for academic periods beginning in 2020 or beginning in the first 3 months of 2021

TIN needed by filing due
date

Filers and students must have been issued a TIN by the
due date of their 2020 return (including extensions)

Educational institution's
EIN

You must provide the educational institution's employer
identification number (EIN) on your Form 8863

Who Can Claim an Education Credit

Who cannot claim a credit. You cannot claim an education
credit on a 2020 tax return if any of the following apply.

You may be able to claim an education credit if you, your
spouse, or a dependent you claim on your tax return was a
student enrolled at or attending an eligible educational
institution. For 2020, the credits are based on the amount of
adjusted qualified education expenses paid for the student in
2020 for academic periods beginning in 2020 or beginning in the
first 3 months of 2021.

1. You're claimed as a dependent on another person's tax
return, such as your parent's return.
2. Your filing status is married filing separately.
3. You (or your spouse) were a nonresident alien for any part
of 2020 and didn't elect to be treated as a resident alien for
tax purposes.
4. Your MAGI is the following.
a. For the American opportunity credit: $180,000 or more
if married filing jointly; or $90,000 or more if single,
head of household, or qualifying widow(er) with
dependent child.
b. For the lifetime learning credit: $138,000 or more if
married filing jointly; or $69,000 or more if single, head
of household, or qualifying widow(er) with dependent
child.
5. If the student has not been issued a TIN by the due date of
their 2020 return (including extensions). Note. This applies
for the American opportunity credit only.

Academic period. An academic period is any quarter,
semester, trimester, or any other period of study, as reasonably
determined by an eligible educational institution. If an eligible
educational institution uses credit hours or clock hours and
doesn't have academic terms, each payment period may be
treated as an academic period. For details, see Academic period
in chapters 2 and 3 of Pub. 970, Tax Benefits for Education.
Who can claim a dependent's expenses. If a student is
claimed as a dependent on another person's tax return, all
qualified education expenses of the student are treated as
having been paid by that person. Therefore, only that person can
claim an education credit for the student. If a student isn't
claimed as a dependent on another person's tax return, only the
student can claim the credit.
Expenses paid by a third party. 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're treated as
having paid expenses that were paid by the third party. For more
information and an example, see Who Can Claim a Dependent's
Expenses in Pub. 970, chapters 2 and 3.

Generally, your MAGI is the amount on your Form 1040 or
1040-SR, line 11. However, if you're filing Form 2555, Foreign
Earned Income; or Form 4563, Exclusion of Income for Bona
Fide Residents of American Samoa; or are excluding income
from Puerto Rico, add to the amount on your Form 1040 or
1040-SR, line 11, the amount of income you excluded. For
details, see Pub. 970.
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Instructions for Form 8863 (2020)

American Opportunity Credit

b. Carried at least one-half the normal full-time workload for
his or her course of study.
The standard for what is half of the normal full-time workload
is determined by each eligible educational institution. However,
the standard may not be lower than any of those established by
the U.S. Department of Education under the Higher Education
Act of 1965.
For 2020, you must treat an academic period beginning in the
first 3 months of 2021 as if it began in 2020 if qualified education
expenses for the student were paid in 2020 for that academic
period. See Prepaid Expenses, later.
Example. Glenda enrolls on a full-time basis in a degree
program for the 2021 spring semester, which begins in January
2021. Glenda pays her tuition for the 2021 spring semester in
December 2020. Because the tuition Glenda paid in 2020
relates to an academic period that begins in the first 3 months of
2021, her eligibility to claim an American opportunity credit in
2020 is determined as if the 2021 spring semester began in
2020. Therefore, Glenda satisfies this third requirement.
4. As of the end of 2020, the student had not been convicted
of a federal or state felony for possessing or distributing a
controlled substance.
5. Filers and students must have been issued a TIN by the
due date of their 2020 return (including extensions).
6. The student received Form 1098-T from the educational
institution for 2020 or you followed the procedures under Form
1098-T requirement, earlier.
7. You must provide the educational institution's employer
identification number (EIN) on your Form 8863.

Don't claim the American opportunity credit for 2 years
after there was a final determination that your claim was
CAUTION due to reckless or intentional disregard of the rules, or
10 years after there was a final determination that your claim was
due to fraud.

!

You may be able to claim a credit of up to $2,500 for adjusted
qualified education expenses (defined later) paid for each
student who qualifies for the American opportunity credit. This
credit equals 100% of the first $2,000 and 25% of the next
$2,000 of adjusted qualified education expenses paid for each
eligible student. The amount of your credit for 2020 is gradually
reduced (phased out) if your MAGI is between $80,000 and
$90,000 ($160,000 and $180,000 if 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).
If you can choose between using a student's adjusted

TIP qualified education expenses for the American

opportunity credit or the lifetime learning credit, the
American opportunity credit will always be greater than the
lifetime learning credit.
Student qualifications. Generally, you can claim the American
opportunity credit for a student on a 2020 tax return only if all of
the following seven requirements are met.
1. As of the beginning of 2020, the student had not
completed the first 4 years of postsecondary education
(generally, the freshman through senior years of college), as
determined by the eligible educational institution. For this
purpose, don't include academic credit awarded solely because
of the student's performance on proficiency examinations.
2. Neither the American opportunity credit nor the Hope
scholarship credit has been claimed (by you or anyone else) for
this student for any 4 tax years before 2020. If the American
opportunity credit (and Hope scholarship credit) has been
claimed for this student for any 3 or fewer tax years before 2020,
this requirement is met.

If the requirements above aren't met for any student, you

TIP cannot claim the American opportunity credit for that

student. You may be able to claim the lifetime learning
credit for part or all of that student's qualified education
expenses instead, if certain requirements are met.

Lifetime Learning Credit

The lifetime learning credit equals 20% of adjusted qualified
education expenses (defined later), up to a maximum of $10,000
of adjusted qualified education 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 paid qualified education expenses. The
amount of your credit for 2020 is gradually reduced (phased out)
if your MAGI is between $59,000 and $69,000 ($118,000 and
$138,000 if you file a joint return). You cannot claim a credit if
your MAGI is $69,000 or more ($138,000 or more if you file a
joint return).

Example 1. Sharon was eligible for the American
opportunity credit for 2014, 2015, 2016, and 2019. Her parents
claimed the American opportunity credit for Sharon on their
2014, 2015, and 2016 tax returns. Sharon claimed the American
opportunity credit on her 2019 tax return. The American
opportunity credit has been claimed for Sharon for 4 tax years
before 2020. Therefore, the American opportunity credit cannot
be claimed for Sharon for 2020. If Sharon were to file Form 8863
for 2020, she would check “Yes” for Part III, line 23, and would
be eligible to claim only the lifetime learning credit if she meets
all other requirements.

You cannot claim the lifetime learning credit for any student if
you claim the American opportunity credit for that student for the
same tax year.

Example 2. Wilbert was eligible for the American opportunity
credit for 2016, 2017, 2018, and 2020. His parents claimed the
American opportunity credit for Wilbert on their tax returns for
2016, 2017, and 2018. No one claimed an American opportunity
credit or Hope scholarship credit for Wilbert for any other tax
year. The American opportunity credit and Hope scholarship
credit have been claimed for Wilbert for only 3 tax years before
2020. Therefore, Wilbert meets the second requirement to be
eligible for the American opportunity credit. If Wilbert were to file
Form 8863 for 2020, he would check “No” for Part III, line 23. If
Wilbert meets all of the other requirements, he is eligible for the
American opportunity credit.
3. For at least one academic period beginning or treated as
beginning (see next) in 2020, the student both:
a. Was enrolled in a program that leads to a degree,
certificate, or other recognized educational credential; and
Instructions for Form 8863 (2020)

Qualified Education Expenses

Generally, qualified education expenses are amounts paid in
2020 for tuition and fees required for the student's enrollment or
attendance at an eligible educational institution. It doesn't matter
whether the expenses were paid in cash, by check, by credit or
debit card, or with borrowed funds.
For course-related books, supplies, and equipment, only
certain expenses qualify.
• American opportunity credit: Qualified education expenses
include amounts paid for tuition, fees, and course materials,
which include books, supplies, and equipment needed for a
course of study, whether or not the materials are purchased from
the educational institution as a condition of enrollment or
attendance.
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• Lifetime learning credit: Qualified education expenses include
amounts paid for books, supplies, and equipment only if
required to be paid to the institution as a condition of enrollment
or attendance.

Tax-free educational assistance. For tax-free educational
assistance received in 2020, reduce the qualified education
expenses for each academic period by the amount of tax-free
educational assistance allocable to that academic period. See
Academic period, earlier.
Tax-free educational assistance includes:
1. The tax-free part of any scholarship or fellowship grant
(including Pell grants);
2. The tax-free part of any employer-provided educational
assistance;
3. Veterans' educational assistance; and
4. Any other educational assistance that is excludable from
gross income (tax free), other than as a gift, bequest, devise, or
inheritance.

Qualified education expenses include nonacademic fees,
such as student activity fees, athletic fees, or other expenses
unrelated to the academic course of instruction, only if the fee
must be paid to the institution as a condition of enrollment or
attendance. However, fees for personal expenses (described
below) are never qualified education expenses.
Qualified education expenses don't include amounts paid for
the following.
• Personal expenses. This means room and board, insurance,
medical expenses (including student health fees), transportation,
and other similar personal, living, or family expenses.
• 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 may be able to increase the combined value of an

TIP education credit if the student includes some or all of a

scholarship or fellowship grant in income in the year it is
received.
Generally, any scholarship or fellowship grant is treated as
tax-free educational assistance. However, a scholarship or
fellowship grant isn't treated as tax-free educational assistance
to the extent the student includes it in gross income (the
student may or may not be required to file a tax return) for the
year the scholarship or fellowship grant is received and either:
• The scholarship or fellowship grant (or any part of it) must be
applied (by its terms) to expenses (such as room and board)
other than qualified education expenses, or
• The scholarship or fellowship grant (or any part of it) may be
applied (by its terms) to expenses (such as room and board)
other than qualified education expenses.

You may receive Form 1098-T from the institution reporting
payments received in 2020 (box 1). However, the amount in
box 1 of Form 1098-T may be different from the amount you paid
(or are treated as having paid). In completing Form 8863, use
only the amounts you actually paid (plus any amounts you're
treated as having paid) in 2020 (reduced, as necessary, as
described under Adjusted Qualified Education Expenses, later).
See chapters 2 and 3 of Pub. 970 for more information on Form
1098-T.
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. 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.

A student cannot choose to include in income a
scholarship or fellowship grant provided by an Indian
CAUTION tribal government that is excluded from income under
the Tribal General Welfare Exclusion Act of 2014 or benefits
provided by an educational program described in section 5.02(2)
(b)(ii) of Rev. Proc. 2014-35, available at IRS.gov/irb/
2014-26_IRB#RP-2014-35.

!

If you or the student takes a deduction for higher education
expenses, such as on Schedule C (Form 1040), you cannot use
those same expenses in your qualified education expenses
when figuring your education credits.

Coordination with Pell grants and other scholarships or
fellowship grants. You may be able to increase an education
credit and reduce your total tax or increase your tax refund if the
student (you, your spouse, or your dependent) chooses to
include all or part of certain scholarships or fellowship grants in
income. The scholarship or fellowship grant must be one that
may qualify as a tax-free scholarship under the rules discussed
in chapter 1 of Pub. 970. Also, the scholarship or fellowship
grant must be one that may (by its terms) be used for expenses
other than qualified education expenses (such as room and
board).
The fact that the educational institution applies the
scholarship or fellowship grant to qualified education expenses
(such as tuition and related fees) doesn't prevent the student
from choosing to apply certain scholarships or fellowship grants
to other expenses (such as room and board). By choosing to do
so, the student will include the part applied to other expenses
(such as room and board) in gross income and may be required
to file a tax return. However, this allows payments made in cash,
by check, by credit or debit card, or with borrowed funds, such
as a student loan, to be applied to qualified education expenses.
These payments, unlike certain scholarships or fellowship
grants, won't reduce the qualified education expenses available
to figure an education credit. The result is generally a larger
education credit that reduces your total tax or increases your tax
refund.

Any qualified expenses used to figure the education
credits cannot be taken into account in determining the
CAUTION amount of a distribution from a Coverdell ESA or a
qualified tuition program (section 529 plan) that is excluded from
gross income. See Pub. 970, chapters 6 and 7, for more
information.

!

Prepaid Expenses

Qualified education expenses paid in 2020 for an academic
period that begins in the first 3 months of 2021 can be used in
figuring an education credit for 2020 only. For example, if you
pay $2,000 in December 2020 for qualified tuition for the 2021
winter quarter that begins in January 2021, you can use that
$2,000 in figuring an education credit for 2020 only (if you meet
all the other requirements).

!

CAUTION

You cannot use any amount you paid in 2019 or 2021 to
figure the qualified education expenses you use to figure
your 2020 education credit(s).

Adjusted Qualified Education
Expenses

For each student, reduce the qualified education expenses paid
in 2020 by or on behalf of that student under the following rules.
The result is the amount of adjusted qualified education
expenses for each student.
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Instructions for Form 8863 (2020)

Example 1. Last year, your child graduated from high school
and enrolled in college for the fall semester. You and your child
meet all other requirements to claim the American opportunity
credit, and you need to determine adjusted qualified education
expenses to figure the credit.
Your child has $5,000 of qualified education expenses and
$4,000 of room and board. Your child received a $5,000 Pell
grant and took out a $2,750 student loan to pay these expenses.
You paid the remaining $1,250. The Pell grant (by its terms) may
be used for any of these expenses.
If you and your child choose to apply the Pell grant to the
qualified education expenses, it will qualify as a tax-free
scholarship under the rules discussed in chapter 1 of Pub. 970.
Your child won't include any part of the Pell grant in gross
income. After reducing qualified education expenses by the
tax-free scholarship, you will have $0 ($5,000 − $5,000) of
adjusted qualified education expenses available to figure your
credit. Your credit will be $0.

2020 and after you file your 2020 income tax return, see Refunds
received after 2020 and after your income tax return is filed,
later.
Refunds. A refund of qualified education expenses may reduce
qualified education expenses for the tax year or may require you
to repay (recapture) the credit that you claimed in an earlier year.
Some tax-free educational assistance received after 2020 may
be treated as a refund. See Tax-free educational assistance
treated as a refund, earlier.
Refunds received in 2020. For each student, figure the
adjusted qualified education expenses for 2020 by adding all the
qualified education expenses paid in 2020 and subtracting any
refunds of those expenses received from the eligible educational
institution during 2020.
Refunds received after 2020, but before your income tax
return is filed. If anyone receives a refund after 2020 of
qualified education expenses paid on behalf of a student in 2020
and the refund is received before you file your 2020 income tax
return, reduce the amount of qualified education expenses for
2020 by the amount of the refund.
Refunds received after 2020 and after your income tax
return is filed. If anyone receives a refund after 2020 of
qualified education expenses paid on behalf of a student in 2020
and the refund is received after you file your 2020 income tax
return, you may need to repay some or all of the credit that you
claimed. See Credit recapture next.

Example 2. The facts are the same as in Example 1. If,
unlike in Example 1, you and your child choose to apply only
$1,000 of the Pell grant to the qualified education expenses and
to apply the remaining $4,000 to room and board, only $1,000
will qualify as a tax-free scholarship.
Your child will include the $4,000 applied to room and board
in gross income, and it will be treated as earned income for
purposes of determining whether your child is required to file a
tax return. If the $4,000 is your child’s only income, your child
won't be required to file a tax return.
After reducing qualified education expenses by the tax-free
scholarship, you will have $4,000 ($5,000 − $1,000) of adjusted
qualified education expenses available to figure your credit. Your
refundable American opportunity credit will be $1,000. Your
nonrefundable credit may be as much as $1,500, but depends
on your tax liability.
If you're not otherwise required to file a tax return, you should
file to get a refund of your $1,000 refundable credit, but your tax
liability and nonrefundable credit will be $0.

Credit recapture. If any tax-free educational assistance for the
qualified education expenses paid in 2020, or any refund of your
qualified education expenses paid in 2020, is received after you
file your 2020 income tax return, you must recapture (repay) any
excess credit. You do this by refiguring the amount of your
adjusted qualified education expenses for 2020 by reducing the
expenses by the amount of the refund or tax-free educational
assistance. You then refigure your education credit(s) for 2020
and figure the amount by which your 2020 tax liability would
have increased if you had claimed the refigured credit(s).
Include that amount as an additional tax for the year the refund
or tax-free assistance was received.

Note. The result may be different if your child has other income
or if you're the student. If you're the student and you claim the
earned income credit, choosing not to apply a Pell grant to
qualified education expenses may decrease your earned income
credit at certain income levels by increasing your adjusted gross
income. For details and more examples, see Pub. 970.

Example. You paid $8,000 tuition and fees in December
2020 for your child's spring semester beginning in January 2021.
You filed your 2020 tax return on February 2, 2021, and claimed
a lifetime learning credit of $1,600 ($8,000 qualified education
expense paid x 20% (0.20)). You claimed no other tax credits.
After you filed your return, your child withdrew from two courses
and you received a refund of $1,400. You must refigure your
2020 lifetime learning credit using $6,600 ($8,000 qualified
education expenses − $1,400 refund). The refigured credit is
$1,320 and your tax liability increased by $280. You must
include the difference of $280 ($1,600 credit originally claimed −
$1,320 refigured credit) as additional tax on your 2021 income
tax return. See the instructions for your 2021 income tax return
to determine where to include this tax.

Unlike a scholarship or fellowship grant, a tax-free

TIP distribution from a Coverdell ESA or qualified tuition

program (section 529 plan) can be applied to either
qualified education expenses or certain other expenses (such as
room and board) without creating a tax liability for the student.
An education credit can be claimed in the same year the
beneficiary takes a tax-free distribution from a Coverdell ESA or
qualified tuition program, as long as the same expenses aren't
used for both benefits. For details, see Pub. 970, chapters 7 and
8.

If you paid qualified education expenses in both 2020

TIP and 2021 for an academic period that begins in the first

3 months of 2021 and you receive tax-free educational
assistance, or a refund, as described above, you may choose to
reduce the qualified education expenses you paid in 2021
instead of reducing the qualified education expenses you paid in
2020.

Tax-free educational assistance treated as a refund. Some
tax-free educational assistance received after 2020 may be
treated as a refund of qualified education expenses paid in 2020.
This tax-free educational assistance is any tax-free educational
assistance received by you or anyone else after 2020 for
qualified education expenses paid on behalf of a student in 2020
(or attributable to enrollment at an eligible educational institution
during 2020).
If this tax-free educational assistance is received after 2020,
but before you file your 2020 income tax return, see Refunds
received after 2020, but before your income tax return is filed,
later. If this tax-free educational assistance is received after
Instructions for Form 8863 (2020)

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

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administered by the Department of Education. Virtually all
accredited postsecondary institutions meet this definition.

1. Were you under age 24 at the end of 2020?
If no, stop here; you do qualify to claim part of the allowable
American opportunity credit as a refundable credit.
If yes, go to question 2.
2. Were you over age 18 at the end of 2020?
If yes, go to question 3.
If no, go to question 4.
3. Were you a full-time student (defined later) for 2020?
If no, stop here; you do qualify to claim part of your allowable
American opportunity credit as a refundable credit.
If yes, go to question 5.
4. Were you age 18 at the end of 2020?
If yes, go to question 5.
If no, go to question 6.
5. Was your earned income (defined later) less
than one-half of your support (defined later) for 2020?
If no, stop here; you do qualify to claim part of your allowable
American opportunity credit as a refundable credit.
If yes, go to question 6.
6. Were either of your parents alive at the end of 2020?
If no, stop here; you do qualify to claim part of your allowable
American opportunity credit as a refundable credit.
If yes, go to question 7.
7. Are you filing a joint return for 2020?
If no, you don't qualify to claim part of your allowable
American opportunity credit as a refundable credit.
If yes, you do qualify to claim part of your allowable
American opportunity credit as a refundable credit.

An eligible educational institution also includes certain
educational institutions located outside the United States that
are eligible to participate in a student aid program administered
by the Department of Education.
The educational institution should be able to tell you if it

TIP is an eligible educational institution.

Additional Information

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

Specific Instructions
!

CAUTION

You must complete a separate Part III on page 2 for
each individual for whom you're claiming either
credit before you complete Parts I and II.

Part I—Refundable American
Opportunity Credit
Line 1

Enter the amount from Part III, line 30. If you're claiming the
American opportunity credit for more than one student, add the
amounts from each student's Part III, line 30, and enter the total
for those students on line 1.

Line 3

Enter your MAGI. Generally, your MAGI is the amount on your
Form 1040 or 1040-SR, line 11. However, if you're filing Form
2555, or Form 4563, or are excluding income from Puerto Rico,
you must include on line 3 the amount of income you excluded.
For details, see Pub. 970.

!

CAUTION

The educational institution's EIN must be provided on
line 22(4) if the American opportunity credit is claimed
for this student.

Earned income. Earned income includes wages, salaries,
professional fees, and other payments received for personal
services actually performed. Earned income includes the part of
any scholarship or fellowship grant that represents payment for
teaching, research, or other services performed by the student
that are required as a condition for receiving the scholarship or
fellowship grant. Earned income doesn't include that part of the
compensation for personal services rendered to a corporation
that represents a distribution of earnings or profits rather than a
reasonable allowance as compensation for the personal
services actually rendered.
If you're a sole proprietor or a partner in a trade or business in
which both personal services and capital are material
income-producing factors, earned income also includes a
reasonable allowance for compensation for personal services,
but not more than 30% of your share of the net profits from that
trade or business (after subtracting the deduction for one-half of
self-employment tax). However, if capital isn't an
income-producing factor and your personal services produced
the business income, the 30% limit doesn't apply.

Line 7

If you were under age 24 at the end of 2020 and the conditions
listed below apply to you, you cannot claim any part of the
American opportunity credit as a refundable credit on your tax
return. Instead, you can claim your allowed credit, figured in Part
II, only as a nonrefundable credit to reduce your tax.
You don't qualify for a refundable American opportunity
credit if 1 (a, b, or c), 2, and 3 below apply to you.
1. You were:
a. Under age 18 at the end of 2020, or
b. Age 18 at the end of 2020 and your earned income
(defined later) was less than one-half of your support
(defined later), or
c. Over age 18 and under age 24 at the end of 2020 and a
full-time student (defined later) and your earned income
(defined later) was less than one-half of your support
(defined later).
2. At least one of your parents was alive at the end of 2020.
3. You're not filing a joint return for 2020.

Support. Support includes food, shelter, clothing, medical and
dental care, education, and the like. Generally, the amount of an
item of support will be the amount of expenses paid by the one
furnishing such item. If the item of support is in the form of
property or lodging, measure the amount of such item of support
by its fair market value. To figure your support, count support
provided by you, your parents, and others. However, a
scholarship received by you isn't considered support if you were
a full-time student (defined next) for 2020.

If you meet these conditions, check the box next to line 7,
skip line 8, and enter the amount from line 7 on line 9. If these
conditions don't apply to you, complete line 8.

Full-time student. Solely for purposes of determining whether
a scholarship is considered support, you were a full-time student

You can answer the following questions to determine whether
you qualify for a refundable American opportunity credit.
-6-

Instructions for Form 8863 (2020)

for 2020 if during any part of any 5 calendar months during the
year you were enrolled as a full-time student at an eligible
educational institution (defined earlier), or took a full-time,
on-farm training course given by such an institution or by a state,
county, or local government agency.

Part III—Student and Educational
Institution Information

Part II—Nonrefundable Education
Credits

Enter the student's name as shown on page 1 of your tax return.

Line 20

Line 21

Enter the student’s social security number (or other TIN, if
applicable) as shown on page 1 of your tax return.

Line 9

Enter the amount from line 9 on the Credit Limit Worksheet,
line 2, later.

Line 22

If the student attended only one educational institution, enter the
information about the institution and answer the questions about
Form 1098-T in column (a). If the student attended a second
educational institution, enter the information and answers for the
second educational institution in column (b). If the student
attended more than two educational institutions, attach an
additional page 2 completed only through line 22.

Line 10

Enter the amount from Part III, line 31. If you're claiming the
lifetime learning credit for more than one student, add the
amounts from each student's Part III, line 31, and enter the total
for all those students on line 10.

Line 14

If the educational institution has a foreign address, enter the
foreign address here and don't abbreviate the country name.
Follow the country's practice for entering the postal code and
name of the province, country, or state.

Generally, your MAGI is the amount on your Form 1040 or
1040-SR, line 11. However, if you're filing Form 2555, or Form
4563, or are excluding income from Puerto Rico, you must
include on line 14 the amount of income you excluded. For
details, see Pub. 970.

The educational institution's EIN must be provided on
line 22(4) if the American opportunity credit is claimed for this
student.

Line 18

Enter the amount from line 18 on the Credit Limit Worksheet,
line 1, later.

Line 23

If the American opportunity credit has been claimed for this
student for any 4 tax years before 2020 (including any year for
which the Hope scholarship credit was claimed for the student),
the American opportunity credit cannot be claimed for this
student for 2020. Check “Yes” and go to line 31.

Line 19

Enter the amount from line 7 of the Credit Limit Worksheet here
and on Schedule 3 (Form 1040), line 3.

If the American opportunity and Hope scholarship credits
have been claimed for this student for 3 or fewer prior tax years,
check “No.” See Student qualifications, earlier.

Credit Limit Worksheet
Complete this worksheet to figure the amount to enter on
line 19.
1. Enter the amount from Form 8863,
line 18 . . . . . . . . . . . . . . . . . . . . .
1.
2. Enter the amount from Form 8863,
line 9 . . . . . . . . . . . . . . . . . . . . . .
2.
3. Add lines 1 and 2 . . . . . . . . . . . . . .
3.
4. Enter the amount from:
Form 1040 or 1040-SR, line 18

. . . . .

4.

5. Enter the total of your credits from:
Schedule 3 (Form 1040), lines 1 and 2,
and Schedule R, line 22 . . . . . . . . . .

5.

6. Subtract line 5 from line 4

. . . . . . . . .

6.

7. Enter the smaller of line 3 or line 6 here
and on Form 8863, line 19 . . . . . . . .

7.

Line 24

Check “Yes” if the student enrolled at least half-time for at least
one academic period that began or is treated as having begun
(see below) in 2020 at an eligible educational institution in a
program leading towards a postsecondary degree, certificate, or
other recognized postsecondary educational credential.
Otherwise, check “No.”
If any qualified education expenses for the student were paid
in 2020 for an academic period beginning in the first 3 months of
2021, treat that academic period as if it began in 2020. See
Student qualifications and Prepaid Expenses, earlier.
If you checked “Yes,” go to line 25. If you checked “No,” the
student isn't eligible for the American opportunity credit; skip
lines 25 through 30 and go to line 31.

Line 25

You must complete Part III for each student for whom
you're claiming either the American opportunity credit or
CAUTION lifetime learning credit before you complete either Part I
or Part II. Use additional copies of page 2 as needed for each
student.

Check “Yes” if the student completed the first 4 years of
postsecondary education before 2020. Otherwise, check “No.”

!

A student has completed the first 4 years of postsecondary
education before 2020 if the educational institution has awarded
the student 4 years of academic credit at that institution for
postsecondary coursework the student completed before 2020.
Disregard any academic credit awarded solely on the basis of
the student's performance on proficiency examinations.
If you checked “No,” go to line 26. If you checked “Yes,” the
student isn't eligible for the American opportunity credit; skip
lines 26 through 30 and go to line 31.

Instructions for Form 8863 (2020)

-7-

Line 26

Adjusted Qualified Education Expenses
Worksheet
See Qualified Education Expenses, earlier, before
completing.

Check “Yes” if the student was convicted, before the end of
2020, of a federal or state felony for possession or distribution of
a controlled substance.
If you checked “No,” complete lines 27 through 30 for this
student. If you checked “Yes,” the student isn't eligible for the
American opportunity credit; skip lines 26 through 30 and go to
line 31.

Complete a separate worksheet for each student for each
academic period beginning or treated as beginning (see below)
in 2020 for which you paid (or are treated as having paid)
qualified education expenses in 2020.

You cannot claim the American opportunity credit and
the lifetime learning credit for the same student in the
CAUTION same year. If you complete lines 27 through 30 for this
student, don't complete line 31.

!

1. Total qualified education expenses paid for or
on behalf of the student in 2020 for the
academic period . . . . . . . . . . . . . . . . . .
2. Less adjustments:
a. Tax-free educational
assistance received in 2020
allocable to the academic
period . . . . . . . . . . . .
b. Tax-free educational
assistance received in 2021
(and before you file your
2020 tax return) allocable to
the academic period . . .
c. Refunds of qualified
education expenses paid in
2020 if the refund is
received in 2020 or in 2021
before you file your 2020
tax return . . . . . . . . . .

American Opportunity Credit
Line 27

Enter the student's adjusted qualified education expenses for
line 27. See Qualified Education Expenses, earlier. Use the
Adjusted Qualified Education Expenses Worksheet, later, to
figure each student's adjusted qualified education expenses.
Don't enter more than $4,000. Enter the total of all amounts from
all Parts III, line 30, on Part I, line 1.

Lifetime Learning Credit
Line 31

Enter the student's adjusted qualified education expenses on
line 31. See Qualified Education Expenses, earlier. Use the
Adjusted Qualified Education Expenses Worksheet next to
figure each student's adjusted qualified education expenses.
Enter the total of all amounts from Part III, line 31, on Part II,
line 10.

3. Total adjustments (add lines 2a, 2b, and
2c) . . . . . . . . . . . . . . . . . . . . . . . . .

. . .

4. Adjusted qualified education expenses.
Subtract line 3 from line 1. If zero or less,
enter -0- . . . . . . . . . . . . . . . . . . . . .

. . .

!

CAUTION

If you're claiming an education credit for more than one
student, complete a separate Part III for each student
before returning to page 1 to complete Parts I and II.

If any qualified education expenses for the student were paid
in 2020 for an academic period beginning in the first 3 months of
2021, treat that academic period as if it began in 2020. See
Student qualifications and Prepaid Expenses, earlier.

-8-

Instructions for Form 8863 (2020)