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 (1998)

Part I

Part II

3

(a) Name of student

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.

1998

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) Name of student

First Last

(c) Qualified

expenses (after

June 30, 1998).

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 3 .

(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.
Form 8863 (1998) Page 3

Lifetime Learning Credit

Exception. For the lifetime learning

credit, you may not use qualified

expenses of any student for whom

you elect to take the Hope credit.

The maximum lifetime learning credit

is $1,000 per year, regardless of the

number of students. Only qualified

expenses paid after June 30, 1998,

and before January 1, 1999, for

academic periods beginning after

June 30, 1998, and before April 1,

1999, can be used to figure the

lifetime learning credit.

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 may be able to claim education

credits for qualified expenses paid in

1998 for a student enrolled at or

attending an eligible educational

institution.

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 TIP under What

Expenses Qualify? below), or

See Pub. 970, Tax Benefits for

Higher Education, for more details

about these credits and other tax

benefits for people who paid higher

education costs.

Rules That Apply to Both

Credits

What Expenses Qualify?

Generally, qualified expenses are

amounts you paid for tuition and

fees required for enrollment or

attendance at an eligible educational

institution for you, your spouse, or a

dependent you claim on your tax

return. Amounts you paid include

amounts charged to your credit

card.

● Books or equipment (except as

provided in regulations).

● Room and board, insurance,

transportation, or other similar

personal, living, or family expenses.

● Any course or other education

involving sports, games, or hobbies,

If you or the student claim 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. Also,

higher education expenses paid with

a tax-free scholarship, Pell grant, or

employer-provided educational

assistance cannot be used when

figuring your education credits.

Expenses paid by a

student whom you claim

as your dependent are

treated as having been

Prepaid Expenses

If you paid qualified expenses in

1998 for an academic period that

begins in the first 3 months of 1999,

you can use the prepaid amount in

figuring your 1998 credit. For

example, if you pay $2,000 in

December 1998 for qualified tuition

for the 1999 winter quarter that

begins in January 1999, you can use

that $2,000 in figuring your 1998

credit.

Caution: You cannot use any

amount paid in 1997 or 1999 to

figure your 1998 education credits.

An eligible educational institution

is generally any accredited public,

nonprofit, or proprietary (private)

college, university, vocational school,

Caution: If a student received a

tax-free distribution from an

education IRA for 1998, none of that

student’s expenses may be used to

figure any 1998 education credits.

However, the student may elect to

be taxed on the distribution. See

Form 8606, Nondeductible IRAs, for

details.

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. The expenses must have

been paid in 1998 for academic

periods starting after December 31,

1997, and before April 1, 1999. You

can claim the Hope credit only for a

student who:

● Had not completed the first 2

years of postsecondary education

(generally, the freshman and

sophomore years of college) as of

December 31, 1997,

● Is enrolled in a program that leads

to a degree, certificate, or other

recognized educational credential,

● Is 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 1998,

and

● Has not been convicted of a

felony for possessing or distributing

a controlled substance.

If a student does not meet all 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.

● $100,000 or more if married filing

jointly, or

● $50,000 or more if single, head of

household, or qualifying widow(er).

What Is an Eligible Educational

Institution?

paid by you. Therefore, you can use

expenses paid with the dependent

student’s earnings, loans, gifts,

inheritances, or personal savings in

figuring your education credits. A

student who is claimed as a

dependent on your return cannot

claim education credits on his or her

return.

Qualified expenses do not include

amounts paid for:

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.

or other postsecondary institution.

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

requirement.
Form 8863 (1998) 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

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 1998 for academic

periods beginning after 1997 but

before April 1, 1999, 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) on

line 4 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 after June 30, 1998

(and before January 1, 1999), for

academic periods beginning after

June 30, 1998 (and before April 1,

1999).

Line 7

This is the maximum lifetime

learning credit you can claim for

1998.

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 adjusted gross

income or the amount of tax you

owe. Part III figures these limits.

Caution: You cannot claim the

lifetime learning credit for any

student for whom you are claiming

the Hope credit.