OMB No. 1545-1618 Education Credits

Form 8863

 See instructions on pages 3 and 4. Department of the Treasury

Internal Revenue Service

Attachment

Sequence No. 51

Name(s) shown on return Your social security number

Hope Credit

1

2

3

Lifetime Learning Credit

Form 8863 (1999)

Part I

Part II

3

(a) Student’s name

Cat. No. 25379M

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

Add the amounts on line 2, columns (d) and (f) 

8

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

9

9

Enter the smaller of line 5 or $5,000

10

Subtract line 10 from line 9. If line 10 is equal to or more than

line 9, stop; you cannot take any education credits

10

12

16

17

4

11

11

15

For Paperwork Reduction Act Notice, see page 4.

First, Last

(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

(but do not

enter more than

$2,000 for each

student). See

instructions

2

Caution: You

cannot take the

Hope credit and

the lifetime learning

credit for the same

student.

(a) Student’s name

First Last

(c) Qualified

expenses. See

instructions

Multiply line 6 by 20% (.20) 

5

6

7

5

6

7

Part III Allowable Education Credits

8 Add lines 3 and 7

Enter: $100,000 if married filing jointly; $50,000 if single, head of

household, or qualifying widow(er)

Enter the amount from Form 1040, line 34 (or Form 1040A, line 19)*

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 your tax from Form 1040, line 40 (or Form 1040A, line 25)

Enter the total, if any, of your credits from Form 1040, lines 41 and 42 (or from

Form 1040A, lines 26 and 27)

16

Subtract line 16 from line 15. If line 16 is equal to or more than line 15, 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 44 (or Form 1040A, line 29)  18

14

13  .

(Hope and Lifetime Learning Credits)

(b) Student’s

social security

number

(b) Student’s

social security

number

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.

1999
Form 8863 (1999) Page 3

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 May Claim the Credits

You cannot claim the education

credits if:

1. Your filing status is married

filing separately,

3. Your adjusted gross income

(from Form 1040, line 34, or Form

1040A, line 19) is:

2. 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

Higher Education, for more details

about these credits.

Rules That Apply to Both

Credits

What Expenses Qualify?

Generally, qualified expenses are

amounts paid in 1999 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.

● Fees for course-related books,

supplies, equipment, and

nonacademic activities, unless the

fees are required to be paid to the

institution as a condition of

enrollment or attendance.

● Amounts paid for room and board,

insurance, medical expenses

(including student health fees),

transportation, or other similar

personal, living, or family expenses.

● Amounts paid for 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.

Prepaid Expenses

Qualified expenses paid in 1999 for

an academic period that begins in

the first 3 months of 2000 can be

used in figuring your 1999 education

credits. For example, if you pay

$2,000 in December 1999 for

qualified tuition for the 2000 winter

quarter that begins in January 2000,

you can use that $2,000 in figuring

your 1999 education credits (if you

meet all the other requirements).

You cannot use any

amount paid in 1998 or

2000 to figure your 1999

education credits.

If a student received a

tax-free distribution from

an education IRA for 1999,

none of that student’s

● $100,000 or more if married filing

jointly, or

● $50,000 or more if single, head of

household, or qualifying widow(er),

or

Qualified expenses do not

include:

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

Example. Your child began college

in the winter of 1999 and you paid

$2,250 tuition in December 1998.

You filed your 1998 return in

February 1999, and claimed a Hope

credit of $1,500. After you filed your

return, your child dropped several

courses and you received a refund

of $750. You must refigure your

1998 Hope credit using $1,500 of

qualified expenses instead of

$2,250. The refigured credit is

$1,250. You must include $250 (the

difference between $1,500 and

$1,250) on line 40 of your 1999

Form 1040 or line 25 of your 1999

Form 1040A.

Tax-free educational assistance

includes a tax-free scholarship or

Pell grant or tax-free

employer-provided educational

assistance.

expenses may be used to figure any

1999 education credits. However, the

student may elect to be taxed on the

distribution and the expenses may

then be used to figure 1999

education credits. See Form 8606,

Nondeductible IRAs, for details.

You may be able to claim 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 (see below) paid

for the student in 1999 for academic

periods beginning in 1999 and the

first three months of 2000.

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, it does not matter who

paid the expenses. Qualified

expenses paid by someone other

than the student (such as a relative)

are treated as paid by the student.

In addition, 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.

4. You (or your spouse) were a

nonresident alien for any part of

1999, and the nonresident alien did

not elect to be treated as a resident

alien.

Additional Information 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

40 of the 1999 Form 1040 or line 25

of the 1999 Form 1040A). Next to

that line, enter the amount and

“ECR.”
Form 8863 (1999) Page 4

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, 13 min.; Learning

about the law or the form, 10 min.;

Preparing the form, 34 min.;

Copying, assembling, and sending

the form to the IRS, 34 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 the tax return with

which this form is filed.

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 (a)

Enter the first name of the student

above the dotted line, and enter the

student’s last name below the

dotted line. Enter the name as

shown on page 1 of your tax return.

Column (b)

Enter the student’s social security

number as shown on page 1 of your

tax return.

Column (c)

Enter only qualified expenses paid

for the student in 1999 for academic

periods beginning after 1998 but

before April 1, 2000, as explained on

page 3. If the student’s expenses

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

Line 3

This is the total Hope credit for all

students shown on line 1.

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

claiming the lifetime learning credit.

Column (a)

Enter the first and last name of the

student as shown on page 1 of your

tax return.

Column (b)

Enter the student’s social security

number as shown on page 1 of your

tax return.

Column (c)

Enter only qualified expenses paid

for the student in 1999 for academic

periods beginning after 1998 but

before April 1, 2000, as explained on

page 3.

Line 7

This is the maximum lifetime

learning credit you can claim.

Note: If you are claiming 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.

Part III

Allowable Education Credits

The amount of your education

credits may be limited by the

amount of your modified adjusted

gross income or the amount of tax

you owe. Part III figures these limits.

You cannot claim the

lifetime learning credit for

any student for whom you

are claiming the Hope

credit.

Lifetime Learning Credit

The maximum lifetime learning credit

is $1,000 per year, regardless of the

number of students. For the lifetime

learning credit, you may not use any

qualified expenses of a student for

whom you elect to take the Hope

credit.

3. 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 1999.

4. The student has not been

convicted of a felony for possessing

or distributing a controlled substance.

If a student does not meet all four

of the above qualifications, you may

be able to take the lifetime learning

credit for part or all of that student’s

qualified expenses instead.

Note: The Hope credit may be

claimed for no more than 2 tax years

for each student.

2. The student was enrolled in

1999 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.

Hope Credit

You may be able to claim a credit of

up to $1,500 for qualified expenses

(defined earlier) paid for each

student who qualifies for the Hope

credit. You can claim the Hope

credit for a student only if all four of

the following apply.

1. As of the beginning of 1999,

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?