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: 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 (2002)

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 claiming

the lifetime learning credit, 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 $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 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

(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 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: $102,000 if married filing jointly; $51,000 if single, head of

household, or qualifying widow(er)

Enter the amount from Form 1040, line 36 *, 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 44, or Form 1040A, line 28 

Enter the total, if any, of your credits from Form 1040, lines 45 through 47, or 

Form 1040A, lines 29 and 30

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 48, 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.

2002

Last name

First name
Form 8863 (2002) 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 on

Form 1040, line 36, or Form 1040A,

line 22, is:

1. You are claimed as a dependent

on another person’s tax return, such

as your parent’s return (but see the

Note earlier).

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 2002 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.

● $102,000 or more if married filing

jointly or

● $51,000 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 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 42 of the 2002 Form 1040

or line 28 of the 2002 Form 1040A).

Enter the amount and “ECR” next to

that line.

Example. You paid $2,250 tuition on

December 26, 2001, and your child

began college on January 29, 2002.

You filed your 2001 tax return on

February 1, 2002, 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

2001 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 42 of your 2002 Form 1040 or line

28 of your 2002 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 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 2002

for academic periods beginning in

2002 and the first 3 months of 2003.

However, qualified expenses do not

include expenses paid directly or

indirectly using tax-free educational

assistance. See Tax-Free Educational

Assistance and Refunds of Qualified

Expenses on this page.

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.

4. 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

Changes to Note

● A new deduction is available for

tuition and fees. See the instructions

for Form 1040, line 26, or Form

1040A, line 19. However, you cannot

claim both the deduction and the

education credits for the same student

in the same year.

5. You (or your spouse) were a

nonresident alien for any part of 2002

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.

● You may be able to claim the

education credits even if the student

excluded a distribution from a

Coverdell education savings account

(ESA) from gross income. But see the

Caution under What Expenses

Qualify.
Form 8863 (2002) 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 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 (c)

Enter only qualified expenses paid for

the student in 2002 for academic

periods beginning after 2001 but

before April 1, 2003, 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

claiming the lifetime learning credit.

Column (c)

Enter only qualified expenses paid for

the student in 2002 for academic

periods beginning after 2001 but

before April 1, 2003, as explained

earlier.

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 2002 is $1,000, regardless of the

number of students.

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 2002.

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 2002

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 2002, 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 2001 or 2003 to

figure your 2002 education

credits.

Qualified expenses paid in 2002 for an

academic period that begins in the

first 3 months of 2003 can be used in

figuring your 2002 education credits.

For example, if you pay $2,000 in

December 2002 for qualified tuition for

the 2003 winter quarter that begins in

January 2003, you can use that

$2,000 in figuring your 2002 education

credits (if you meet all the other

requirements).

Prepaid Expenses