Understanding Form 8863: Education Tax Credits for 2023

💡The American Opportunity credit is generally more favorable as it provides a higher tax benefit.

🧑‍🎓The American Opportunity credit can only be claimed for the first four years of college and requires at least halftime enrollment and pursuit of a degree.

🌐The lifetime learning credit has no limit on the number of years it can be claimed and can be accessed even if the taxpayer is not pursuing a degree.

💲The lifetime learning credit is non-refundable, meaning it can only be used to offset taxes owed.

📝Form 8863 is used to claim the education tax credits and requires information about the student, educational institution, expenses, and other relevant details.

What is the maximum credit amount for Form 8863?

—The maximum credit amount is $2,000 per return, calculated as 20% of qualifying education costs.

Can the American Opportunity credit be claimed for more than four years?

—No, the American Opportunity credit can only be claimed for the first four years of college.

Can the lifetime learning credit be claimed without pursuing a degree?

—Yes, the lifetime learning credit does not require the taxpayer to be pursuing a degree.

Is the lifetime learning credit refundable?

—No, the lifetime learning credit is non-refundable, meaning it can only be used to offset taxes owed.

What information is required to complete Form 8863?

—Form 8863 requires information about the student, educational institution, education expenses, and other relevant details.

00:01This video covers Form 8863 for Education tax credits for the 2023 tax year.

02:00The American Opportunity credit is generally more favorable but has limitations.

03:55The lifetime learning credit is more flexible and has no limit on the number of years it can be claimed.

06:09Example scenario: The taxpayer in this scenario is eligible for the lifetime learning credit.

07:21Form 8863 requires information about the student, educational institution, expenses, and other relevant details.