Form 8863, Education Credits
What is Form 8863?
TurboTax is seeing normal funding rates for IRS with returns with Form 8863 – as well as all other returns. About 9 out of 10 returns within 21 days.
If you're outside of 21 days after receiving acknowledgment that the IRS got your return, you would likely receive a letter from IRS requesting additional information or providing details on why your refund wasn't issued (I.e. Back taxes, child support, or if there is a need to further validate the identity of the taxpayer, etc.). We recommend taxpayers contact IRS after than 21 day period if they haven't already heard from IRS.
If you plan on claiming one of the IRS educational tax credits, be sure to fill out a Form 8863 and attach it to your tax return. These credits can provide a dollar-for-dollar reduction in the amount of tax you owe at the end of the year for the costs you incur to attend school. Before preparing the form, however, make sure that you satisfy the requirements of an eligible student.
Entering Form 8863 into TurboTax
Claiming the education credits can require some complex calculations, but don't worry! When you use TurboTax to prepare your taxes, we’ll ask you questions about your education expenses, figure out which credits or deductions result in the greatest refund, and fill in all the right forms for you.
If you've already gone through the step-by-step interview and want to jump directly to the entry screen for Form 8863, follow these directions.
- Select the Federal Taxes tab (the Personal tab in the Home & Business edition).
- Select the Deductions & Credits subtab, click on Explore on My Own.
- Scroll down the Deductions & Credits screen until you see the Education group.
- Click on the Start/Update button to the right of the Education Expenses and Scholarships category.
- Follow the prompts.
Claiming the American Opportunity credit
The American Opportunity credit can reduce your tax liability by up to a $2,500 for educational expenses you or a dependent student incur during the first four years of post-secondary schooling. The credit is calculated based on the amount you pay for tuition, fees, books and supplies required for the coursework. The credit is only available to students who enroll at least half-time for one or more academic semesters during the tax year and are pursuing an undergraduate degree or other recognized credential. To claim the credit, your Modified Adjusted Gross Income (MAGI) must be below $90,000 if filing individually, or $180,000 if married filing jointly.
Claiming the Lifetime Learning credit
The Lifetime Learning credit can reduce your tax liability by up to $2,000 for the cost of enrollment in a post-secondary school. The expense of books and other supplies are not covered by this credit unless the school requires it as a condition of enrollment and you pay the school directly for these items. This credit provides more flexibility, as it only requires the student be enrolled in at least one course during the tax year. The course need not be part of a degree program; taking just one course to enhance job skills qualifies you to claim the credit. This tax credit is only available to taxpayers with an MAGI below $60,000 if filing individually, or $120,000 if married filing jointly.
Calculating your MAGI
MAGI is based on your Adjusted Gross Income (AGI). Your AGI is essentially all gross income minus certain deductions such as moving expenses, IRA and health savings account contributions, alimony payments, student loan interest and educator expenses. For most taxpayers, MAGI is equal to the AGI you calculate on the first page of Form 1040. However, taxpayers who live and work abroad must increase AGI by the amount of foreign earned income and housing they exclude from taxable income to arrive at MAGI.
If you need to correct or change any information you have entered on your 8863, the steps you take depends on if you have already filed your tax return.
- If you have yet to file your return, simply follow the navigation instructions above, and correct or change your information.
- If you have already filed your return, you will need to amend your return. Please click here for instructions.
For questions about printing, please click here.
If you have questions about the availability of form 8863, please click here.