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 (2004)

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

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: $105,000 if married filing jointly; $52,000 if single, head of

household, or qualifying widow(er)

Enter the amount from Form 1040, line 37*, 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 45, or Form 1040A, line 28 

18

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

credits 

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

line 49, or Form 1040A, line 31 

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

* 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.

 Attach to Form 1040 or Form 1040A.

Last name

First name

Caution: You cannot take both an education credit and the tuition and fees deduction (Form 1040, line 27, or Form 1040A, 

line 19) for the same student in the same year.

2004

17

18

16

17

Enter the total, if any, of your credits from Form 1040, lines 46 through 48, or Form

1040A, lines 29 and 30

(99)
Form 8863 (2004) 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 37, or

Form 1040A, line 22, is (a) $105,000 or more if married filing

jointly, or (b) $52,000 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 2004 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 2004 tax return (Form

1040, line 43, or Form 1040A, line 28). Enter the amount and

“ECR” next to that line.

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 2004 for academic periods beginning in

2004 and the first 3 months of 2005.

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 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 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 27, or Form 1040A, line 19, for the same student.

Additional Information

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

of 2004 and the nonresident alien did not elect to be treated

as a resident alien.

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

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. CAUTION

CAUTION

Example. You paid $2,250 tuition on December 26, 2003,

and your child began college on January 27, 2004. You filed

your 2003 tax return on February 2, 2004, 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 2003 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 your 2004 Form

1040, line 43, or Form 1040A, line 28.

You cannot use any amount paid in 2003 or 2005

to figure your 2004 education credits.

Qualified expenses paid in 2004 for an academic period that

begins in the first 3 months of 2005 can be used in figuring

your 2004 education credits. For example, if you pay $2,000

in December 2004 for qualified tuition for the 2005 winter

quarter that begins in January 2005, you can use that $2,000

in figuring your 2004 education credits (if you meet all the

other requirements).

Prepaid Expenses

CAUTION
Form 8863 (2004) Page 3

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 2004 for

academic periods beginning after 2003 but before April 1,

2005, 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, enter “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 on line 2,

columns (d) and (f).

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 2004 for

academic periods beginning after 2003 but before April 1,

2005, as explained earlier.

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

than three students, enter “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),

for all students 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 2004 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 2004.

● 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 2004 in a program that leads

to a degree, certificate, or other recognized educational

credential.

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 2004, 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 Hope credit was not claimed for that student’s

expenses in more than one prior tax year.

CAUTION

TIP

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.

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.

What Is an Eligible Educational

Institution?