OMB No. 1545-1618 Education Credits

Form 8863

 See instructions. Department of the Treasury

Internal Revenue Service

Attachment

Sequence No. 50

Name(s) shown on return Your social security number

Hope Credit. Caution: You cannot take the Hope credit for more than 2 tax years for the same student.

1

2

3

Lifetime Learning Credit

Form 8863 (2003)

Part I

Part II

3

(a) Student’s name

(as shown on page 1

of your tax return)

Cat. No. 25379M

Add the amounts in columns (d) and (f)

Tentative Hope credit. Add the amounts on line 2, columns (d) and (f). If you are taking

the lifetime learning credit for another student, go to Part II; otherwise, go to Part III 

8

Add the amounts on line 4, column (c), and enter the total

9

9

Enter the smaller of line 5 or $10,000

10

Subtract line 10 from line 9. If zero or less, stop; you cannot take

any education credits

10

12

16

17

4

11

11

15

For Paperwork Reduction Act Notice, see page 3.

(f) Enter one-half

of the amount in

column (e)

(e) Subtract

column (d) from

column (c)

(d) Enter the

smaller of the

amount in

column (c) or

$1,000

(c) Qualified

expenses (see

instructions). Do

not enter more

than $2,000 for

each student.

2

Caution: You

cannot take the

Hope credit and

the lifetime learning

credit for the same

student in the

same year.

(a) Student’s name (as shown on page 1

of your tax return)

First name Last name

(c) Qualified

expenses (see

instructions)

Tentative lifetime learning credit. Multiply line 6 by 20% (.20) and go to Part III 

5

6

7

5

6

7

Part III Allowable Education Credits

8 Tentative education credits. Add lines 3 and 7

Enter: $103,000 if married filing jointly; $51,000 if single, head of

household, or qualifying widow(er)

Enter the amount from Form 1040, line 35*, or Form 1040A, line 22

If line 11 is equal to or more than line 12, enter the amount from line 8 on line 14 and

go to line 15. If line 11 is less than line 12, divide line 11 by line 12. Enter the result as

a decimal (rounded to at least three places)

13

14 Multiply line 8 by line 13 

15 Enter the amount from Form 1040, line 43, or Form 1040A, line 28 

Enter the total, if any, of your credits from Form 1040, lines 44 through 46, or 

Form 1040A, lines 29 and 30

16

Subtract line 16 from line 15. If zero or less, stop; you cannot take any education

credits 

17

18 Education credits. Enter the smaller of line 14 or line 17 here and on Form 1040,

line 47, or Form 1040A, line 31  18

14

13  .

(Hope and Lifetime Learning Credits)

(b) Student’s

social security

number (as

shown on page 1

of your tax return)

(b) Student’s social security

number (as shown on page

1 of your tax return)

Enter: $20,000 if married filing jointly; $10,000 if single, head of

household, or qualifying widow(er) 12

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

 Attach to Form 1040 or Form 1040A.

Last name

First name

2003

Caution: You cannot take both an education credit and the tuition and fees deduction (Form 1040, line 26, or Form 1040A, 

line 19) for the same student in the same year.
Form 8863 (2003) Page 2

General Instructions

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.

Who Can Take the Credits

You cannot take the education credits if any of the

following apply.

● Your filing status is married filing separately.

● Your adjusted gross income on Form 1040, line 35, or

Form 1040A, line 22, is (a) $103,000 or more if married

filing jointly or (b) $51,000 or more if single, head of

household, or qualifying widow(er).

● You are claimed as a dependent on another person’s

tax return, such as your parent’s return (but see the Note

above).

See Pub. 970, Tax Benefits for Education, for more

information about these credits.

Rules That Apply to Both Credits

What Expenses Qualify?

Generally, qualified expenses are amounts paid in 2003

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.

● Course-related books, supplies, equipment, and

nonacademic activities, except for fees required to be

paid to the institution as a condition of enrollment or

attendance.

● Room and board, insurance, medical expenses

(including student health fees), transportation, or other

similar personal, living, or family expenses.

● Any course or other education involving sports, games,

or hobbies, unless such course or other education is part

of the student’s degree program or (for the lifetime

learning credit only) helps the student to acquire or

improve job skills.

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.

Qualified expenses do not include amounts paid for:

Tax-Free Educational Assistance and Refunds of

Qualified Expenses

You must reduce the total of your qualified expenses by

any tax-free educational assistance and by any refunds of

qualified 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 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

figure 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 on the tax line of your tax return (line 41 of the

2003 Form 1040 or line 28 of the 2003 Form 1040A).

Enter the amount and “ECR” next to that line.

Example. You paid $2,250 tuition on December 26, 2002,

and your child began college on January 29, 2003. You

filed your 2002 tax return on February 1, 2003, and

claimed a Hope credit of $1,500. After you filed your

return, your child dropped two courses (but maintained

one-half of a full-time workload), and you received a

refund of $750. You must refigure your 2002 Hope credit

using $1,500 of qualified expenses instead of $2,250. The

refigured credit is $1,250. You must include the difference

of $250 on line 41 of your 2003 Form 1040 or line 28 of

your 2003 Form 1040A.

Tax-free educational assistance includes a tax-free

scholarship or Pell grant or tax-free employer-provided

educational assistance.

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 expenses paid for the student in 2003 for

academic periods beginning in 2003 and the first 3

months of 2004.

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 may claim the credits for the

student’s qualified expenses. If a student is not claimed as

a dependent on another person’s tax return, only the

student may claim the credits.

Generally, qualified expenses paid on behalf of the

student by someone other than the student (such as a

relative) are treated as paid by the student. Also, qualified

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 are taking a deduction for tuition and fees on Form

1040, line 26, or Form 1040A, line 19, for the same

student.

Additional Information

A Change To Note

The maximum lifetime learning credit has increased to

$2,000.

● You (or your spouse) were a nonresident alien for any

part of 2003 and the nonresident alien did not elect to be

treated as a resident alien.

Any qualified expenses used to figure the

education credits may not be taken into account

in determining the amount of a distribution from

a Coverdell ESA or a qualified state tuition

program that is excluded from gross income.

Qualified 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 Expenses on this page.
Form 8863 (2003) Page 3

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 time needed to complete and file this form will vary

depending on individual circumstances. The estimated

average time is: Recordkeeping, 12 min.; Learning

about the law or the form, 8 min.; Preparing the form,

32 min.; Copying, assembling, and sending the form to

the IRS, 33 min.

If you have comments concerning the accuracy of

these time estimates or suggestions for making this form

simpler, we would be happy to hear from you. See the

Instructions for Form 1040 or Form 1040A.

Specific Instructions

Part I

Hope Credit

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.

Column (c)

Enter only qualified expenses paid for the student in 2003

for academic periods beginning after 2002 but before

April 1, 2004, as explained earlier. If the student’s

expenses are more than $2,000, enter $2,000.

Note: If you have more than three students who qualify

for the Hope credit, write “See attached” next to line 1

and attach a statement with the required information for

each additional student. Include the totals from line 1,

columns (d) and (f), for all students in the amount you

enter in columns (d) and (f) on line 2.

Part II

Lifetime Learning Credit

Line 4

Complete columns (a) through (c) for each student for

whom you are taking the lifetime learning credit.

Column (c)

Enter only qualified expenses paid for the student in 2003

for academic periods beginning after 2002 but before

April 1, 2004, as explained earlier.

Note: If you are taking the lifetime learning credit for more

than five students, write “See attached” next to line 4 and

attach a statement with the required information for each

additional student. Include the totals from line 4, column

(c), in the amount you enter on line 5.

You cannot take the lifetime learning credit for

any student for whom you are taking the Hope

credit.

The maximum lifetime learning credit for 2003 is $2,000,

regardless of the number of students.

● 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 2003.

● The student has not been convicted of a felony for

possessing or distributing a controlled substance.

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 expenses instead.

● The student was enrolled in 2003 in a program that

leads to a degree, certificate, or other recognized

educational credential.

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.

You may be able to take a credit of up to $1,500 for

qualified expenses (defined earlier) paid for each student

who qualifies for the Hope credit. You can take the Hope

credit for a student if all of the following apply.

● As of the beginning of 2003, 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.

What Is an Eligible Educational Institution?

● The Hope credit was not claimed for that student’s

expenses in more than one prior tax year.

You cannot use any amount paid in 2002 or

2004 to figure your 2003 education credits.

Qualified expenses paid in 2003 for an academic period

that begins in the first 3 months of 2004 can be used in

figuring your 2003 education credits. For example, if you

pay $2,000 in December 2003 for qualified tuition for the

2004 winter quarter that begins in January 2004, you can

use that $2,000 in figuring your 2003 education credits (if

you meet all the other requirements).

Prepaid Expenses