OMB No. 1545-1618 Education Credits

Form 8863

 See instructions on pages 2 and 3. Department of the Treasury

Internal Revenue Service

Attachment

Sequence No. 50

Name(s) shown on return Your social security number

Hope Credit. Caution: The Hope credit may be claimed for no more than 2 tax years for the same student.

1

2

3

Lifetime Learning Credit

Form 8863 (2001)

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) 

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 (as shown on page 1

of your tax return)

First Last

(c) Qualified

expenses. See

instructions

Tentative lifetime learning credit. Multiply line 6 by 20% (.20) 

5

6

7

5

6

7

Part III Allowable Education Credits

8 Tentative education credits. 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 20)*

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 42 (or Form 1040A, line 26)

Enter the total, if any, of your credits from Form 1040, lines 43 through 45 (or from

Form 1040A, lines 27 and 28)

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 46 (or Form 1040A, line 29)  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.

2001
Form 8863 (2001) 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 May Claim the Credits

You cannot claim the education

credits if any of the following apply.

2. Your filing status is married

filing separately.

3. Your adjusted gross income

(from Form 1040, line 34, or Form

1040A, line 20) is:

1. 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

information about these credits.

Rules That Apply to Both

Credits

What Expenses Qualify?

Generally, qualified expenses are

amounts paid in 2001 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.

● Amounts paid for 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.

● 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 2001 for

an academic period that begins in

the first 3 months of 2002 can be

used in figuring your 2001 education

credits. For example, if you pay

$2,000 in December 2001 for

● $100,000 or more if married

filing jointly or

● $50,000 or more if single, head

of household, or qualifying

widow(er).

Qualified expenses do not include

the following.

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

Example. You paid $2,250 tuition on

December 26, 2000, and your child

began college on January 29, 2001.

You filed your 2000 tax return on

February 1, 2001, 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 2000 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 40 of

your 2001 Form 1040 or line 26 of

your 2001 Form 1040A.

Tax-free educational assistance

includes a tax-free scholarship or

Pell grant or tax-free employerprovided educational assistance.

If a student received a

tax-free distribution from a

Coverdell education savings

account (ESA) in 2001,

none of that student’s expenses may

be used to figure any 2001

education credits. However, the

student may elect to be taxed on the

distribution and the expenses may

then be used to figure 2001

education credits. See Form 8606,

Nondeductible IRAs and Coverdell

ESAs, 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 paid for the

student in 2001 for academic

periods beginning in 2001 and the

first 3 months of 2002. However,

qualified expenses do not include

expenses paid directly or indirectly

using tax-free educational

assistance (see below).

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. 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

2001 and the nonresident alien did

not elect to be treated as a resident

alien.

Additional Information

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

40 of the 2001 Form 1040 or line 26

of the 2001 Form 1040A). Enter the

amount and “ECR” next to that line.
Form 8863 (2001) 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, 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.

Column (c)

Enter only qualified expenses paid

for the student in 2001 for academic

periods beginning after 2000 but

before April 1, 2002, as explained on

page 2. 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

claiming the lifetime learning credit.

Column (c)

Enter only qualified expenses paid

for the student in 2001 for academic

periods beginning after 2000 but

before April 1, 2002, as explained on

page 2.

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.

The maximum lifetime learning credit

for 2001 is $1,000, regardless of the

number of students. For the lifetime

learning credit, you cannot 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 2001.

5. The student has not been

convicted of a felony for possessing

or distributing a controlled substance.

If a student does not meet all five

of the qualifications, you may be

able to take the lifetime learning

credit for part or all of that student’s

qualified expenses instead.

2. The student was enrolled in

2001 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 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 if all five of the

following apply.

1. As of the beginning of 2001,

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?

4. 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 2000 or

2002 to figure your 2001

education credits.

qualified tuition for the 2002 winter

quarter that begins in January 2002,

you can use that $2,000 in figuring

your 2001 education credits (if you

meet all the other requirements).