Form 8863 Of The IRS: Here’s What You Need To Know?

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IRS Form 8863

If you use Form 8863 while filing your taxes related to your education, you will be able to claim tax credits. However, you have to make sure that the expenses that you made are qualified education expenses, and you must be a part of an eligible post-secondary educational institution. The types of tax credits available are the American Opportunity Credit and the Lifetime Learning Credit.

In this article, you will learn some of the general details about the IRS 8863 Form and how to fill out the form to get tax credits on expenses related to your education. However, apart from these, we will shortly discuss the uses of the 8863 Form and the eligibility you need to claim the credits by filling out the form. Hence, to know more about this form, read on through to the end of the article.

What Is Form 8863?

The federal government offers various tax credits on educational expenses, provided that the student gets an education from an institution eligible for the federal program for student aid. If you want to get tax credits for educational expenses that you made at your eligible post-secondary institution, you will need to fill out the IRS Form 8863.

It must be kept in mind that you are eligible for the tax credit only If you are enrolled in a post-secondary institution eligible for tax credits provided by the federal student aid program. This is also true for you if you pay for your dependent or spouse. In that case, you will also receive a 1098-T Form, which is to get other benefits related to educational expenses.

What Is Form 8863 Used For?

According to the official IRS website,

Use Form 8863 to figure and claim your education credits, which are based on qualified education expenses paid to an eligible postsecondary educational institution.”

You will need to fill out this form to get two major types of tax credits – the American Opportunity Credit and the Lifetime Learning Credit.

If you are eligible for the American Opportunity Credit for educational expenses, then you are, by default, eligible to claim the Lifetime Learning Credit in the same year.

However, you will be able to claim any one of those tax credits. You cannot claim for both of the tax credits. For example, if you have claimed the American Opportunity Credit in 2022, you will not be able to claim the Lifetime Learning Credit in 2023, despite the fact that you are eligible for both.

Additionally, according to TaxSlayer.com,

If you pay qualified education expenses for more than one student in the same year, you can choose to take the American Opportunity and the Lifetime Learning credits on a per-student, per-year basis. This means you can claim the American Opportunity Credit for one student and the Lifetime Learning Credit for another student in the same year.

Requirements For Claiming The Tax Credits

Firstly, to claim educational tax credits, you will need to be a part of an eligible educational institution. An eligible educational institution, in this case, can be any vocational school, college, university, or other post-secondary institution. Basically, the institution must participate in the federal student aid program. This student aid program is run by the United States Department of Education.

Virtually all accredited public, proprietary, and non-profit post-secondary institutions are eligible for this program. If you want to know whether your educational institution is eligible or not, you can ask your institution’s inquiry office.

What Are The Education Benefits Available With Form 8863?

The following are the major education benefits as tax credits available to you, which you can get after filling out Form 8863:

1. American Opportunity Credit

According to Intuit Turbotax,

The American Opportunity credit can reduce your tax liability by up to a $2,500 per student for educational expenses you or a dependent student incur during the first four years of post-secondary schooling. The credit is calculated based on the amount you pay for tuition, fees, books and supplies required for the coursework.”

However, this credit is only available to you if you enroll during the tax year at least half-time for one or more of your academic semesters. You will also have to pursue an eligible degree or any other recognized credential.

2. Lifetime Learning Credit

As per every tax return for enrollment costs, the Lifetime Learning Credit can reduce your tax liability up to $2000. However, this applies if you are studying in an eligible post-secondary school. Expenses related to books, as well as other supplies, are not covered by this credit benefit. However, if the school recognizes these expenses as conditions for enrollment, you will have to pay your school directly for such expenses.

Things You Need To Fill Up Form 8836

For someone new, it can be hard to interpret Form 8836. Hence, the first thing that you need to do is find out whether your institution sent you or mailed you Form 1098 T (also called the Tuition Statement). If you cannot find Form 1098-T, you will need to ask your institution’s inquiry office.

According to HRBlock.com,

If you can’t find it, or if your school didn’t send you one, it’s possible you can get an electronic copy from your school’s online portal. Or, they may have emailed it to you. While there are some circumstances where you can file without a form, this may raise questions with the IRS.”

Furthermore, you will need the following things if you want to complete the IRS Form 8863:

  1. Form W2 or Form 1099. You will need to use this information to calculate your Modified Adjusted Gross Income (MAGI).
  2. You will need to provide your TIN, as well as the information about your institution.
  3. You will also need to document your qualified expenses.

Final Thoughts

Hope this article was helpful for you in getting a better idea of what the IRS Form 8863 is. Also, you learned how to use the form to get tax credits and benefits for your educational expenses. If you want to get the form, contact your school’s inquiry office, and they will provide you with details on how to fill it out. Do you have any further information about this form? Share with us in the comments section below.

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