Form 8863 2022 Printable, Fillable PDF – The American Opportunity Tax Credit (AOTC) is a federal tax credit that reimburses students for eligible school costs incurred during their first four years of higher education. Because a portion of the AOTC credit is refundable, you may be eligible for a tax refund if you file Form 8863 and reduce your tax liability to zero, up to a maximum of $1,000.
What Is The Monetary Value Of AOTC?
The AOTC is computed using Form 8863 and is equal to 100 percent of the first $2,000 in qualifying costs you pay for each eligible student, plus 25 percent of the following $2,000 in qualified expenses you pay for that student (as of 2019).
In order to be eligible for the full AOTC credit while completing Form 8863, your modified adjusted gross income (MAGI) must be $80,000 or less ($160,000 or less if you are married and filing jointly). If your modified adjusted gross income (MAGI) is more than $90,000 (or $180,000 for joint filers), you are ineligible for IRS Form 8863. However, if your MAGI is between $80,000 and $90,000 ($160,000–$180,000), you may get a reduced amount.
Tax Form 8863, Credit For Lifelong Learning (LLC)
In contrast to the AOTC, the LLC is non-refundable; however, there is no limit to the number of years in which it can be claimed.LLC is offered for all years of postsecondary education, as well as for courses that teach students how to acquire or develop job-related abilities. As a result, the LLC is less restricted than the AOTC, as the student is not required to obtain a degree or other recognized educational certification in order to participate.
What Is The Lifetime Learning Credit And How Does It Work?
It is an excellent method to defray the costs of enrollment or attendance (including sums owed to the school for course-related books, supplies, and equipment), but it may only be claimed once per return, rather than once for each student who is enrolled or attending.
What Is The Value Of An LLC?
As of 2019, you may claim a tax credit of up to $2,000 per return by submitting IRS Form 8863.
To be eligible for the entire LLC, your modified adjusted gross income (MAGI) must be $68,000 or less ($136,000 or less if you are married filing jointly). If your modified adjusted gross income (MAGI) is more than either of these two thresholds, you will be unable to claim the LLC on Form 8863, while you will be eligible for a reduced credit amount for MAGIs between $58,000 and $68,000 ($116,000–$136,000 if you are filing jointly).
Education Credits On Form 8863 Of The Internal Revenue Service
It’s important to remember that you may claim both on the same tax return, but you can only claim one per student when completing IRS Form 8863. The AOTC cannot be combined with the LLC for the same student in the same year if you want to claim the AOTC on your tax return using Form 8863, since this is not allowed. If you have numerous dependents who are enrolled in higher education, you may pick which credit to claim on a per-student, per-year basis if you have more than one dependant in college. For example, you may claim the AOTC for one student while still claiming the LLC for another throughout the same calendar year.
It’s vital to remember that Form 8863 provides you with a tax credit rather than a tax deduction. The distinction is that tax deductions reduce your total taxable income, while tax credits are removed directly from the amount you owe. This implies that by using Form 8863, you can save more money dollar for dollar than you would otherwise be able to save. For further information, see our page on the difference between tax credits and tax deductions.
Having trouble determining whether or not you qualify for Form 8863 education credits? Let’s have a look at this.
Qualifications For Tax Form 8863 Education Credits Who Is Eligible for Tax Form 8863 Education Credits?
According to IRS Form 8863, in order to be qualified for the AOTC, the student must meet the following requirements:
- A degree or other recognized educational certificate should be sought after.
- Attend at least half-time for at least one academic period during the tax year’s beginning (an “academic period,” according to the IRS, is defined as semesters, trimesters, and quarters, as well as any other period of study designated by the school, such as a summer school session).
- not have completed the first four years of higher education at the beginning of a tax year and have not claimed the American Opportunity Tax Credit (AOTC) or the previous Hope credit for more than four years
- By the end of the year, you must not have a felony drug conviction.
If you use Form 8863, which is the less restricted education credit, it’s a little simpler to qualify for and claim the LLC. You must satisfy the following requirements in order to be eligible for the LLC:
- Attending or taking courses at an approved educational institution is a requirement.
- Enroll in higher education courses in order to get a degree, a nationally recognized education certification, or job-related skills.
- be enrolled in at least one academic period that begins during the tax year in question.
Instructions For Completing IRS Form 8863
You’ll need your Form 1098-T Tuition Statement on hand if you want to claim the AOTC or LLC education credit using IRS Form 8863, which is available online. This document, which is normally issued by the school, displays the amount of money that has been invoiced or received for the current school year.
Keep in mind that the amount listed on the Form 1098-T may not be the same amount that you claim on your Form 8863, so double-check your paperwork. Make sure to thoroughly review Form 8863 for qualifying costs, such as room and board, in order to determine the amount of credit you are eligible to claim from the IRS.
Follow the directions on Lines 4 and 7 of the Form 8863 line by line, taking notice of specific hypotheses as shown on Lines 4 and 7. Attach the tax Form 8863 to your Form 1040 or similar, and remember to complete a separate Part III on page 2 for each student who is enrolled in the program.
IRS Form 8863: Helpful Hints
When claiming an education credit on Form 8863, proceed with caution. You may be forced to refund the education credit, plus interest, if the IRS audits your return and determines that your claim is erroneous or if you do not have the appropriate documentation to demonstrate that you qualified.
If you’re concerned about how to file your taxes as a student, you can rely on the professionals at Community Tax. As part of this process, we’ll determine whether or not you qualify for Form 8863 education credits, and we’ll look into any other credits, deductions, or write-offs that you could be eligible for at the same time. You may rely on community tax filing services if you want to get the most out of your tax return this year and save more money than you ever thought possible on your taxes.