Form 8863: Education Credits (American Opportunity and Lifetime Learning Credits)

You may be able to claim a credit if you, your spouse, or a dependent you claim on your return was a student enrolled at or attending an eligible educational institution. That means an accredited public, nonprofit, or private college, university, vocational school, or other postsecondary school that can take part in a student aid program run by the Department of Education. Certain schools outside the United States count too. The school should be able to tell you whether it qualifies.

The credits use adjusted qualified education expenses paid in 2025 for academic periods that begin in 2025 or in the first 3 months of 2026. If a relative pays a student's expenses, the money counts as paid by the student. If that student is claimed as a dependent on your return, the same expenses count as paid by you, so only you can claim the credit. Five things rule out a credit for 2025.

• Someone else claims you as a dependent, such as your parent
• Your filing status is married filing separately
• You or your spouse was a nonresident alien for any part of 2025 and did not elect to be treated as a resident alien
• Your MAGI is $180,000 or more filing jointly, or $90,000 or more if single, head of household, or qualifying surviving spouse
• The student has not been issued a TIN by the due date of the 2025 return, including extensions

The form and its instructions do not give Form 8863 a due date of its own. You use it when you file your 2025 income tax return, and you attach it to Form 1040 or 1040-SR as attachment sequence number 50. The refundable part of the American opportunity credit goes on Form 1040 or 1040-SR, line 29. Your nonrefundable education credits go on Schedule 3 (Form 1040), line 3. One deadline does matter here. You and the student must have been issued a TIN by the due date of your 2025 return, including extensions, or the American opportunity credit is not allowed on your original or amended return.

The American opportunity credit is worth up to $2,500 for each eligible student. It equals 100% of the first $2,000 and 25% of the next $2,000 of adjusted qualified education expenses. Up to 40% of it can be refundable. It works only for a student who had not completed the first 4 years of postsecondary education before 2025, and only for 4 tax years per student. The student must be enrolled at least half-time for at least one academic period beginning during 2025 in a program leading to a degree or other recognized credential.

The lifetime learning credit equals 20% of up to $10,000 of adjusted qualified education expenses per return, so the most you can claim is $2,000 no matter how many students you paid for. It is nonrefundable, so it is limited to the tax you must pay on your taxable income. It covers all years of postsecondary education, one or more courses, and courses taken to acquire or improve job skills. You can claim both credits on the same return, but never for the same student in the same year.

• Both credits phase out between $80,000 and $90,000 of MAGI, or between $160,000 and $180,000 on a joint return
• A felony drug conviction before the end of 2025 rules out the American opportunity credit but not the lifetime learning credit
• The school's EIN is required for the American opportunity credit and not for the lifetime learning credit
• When you can choose either credit for a student, the American opportunity credit is always the larger one

Start on page 2. You complete a separate Part III for each student before you touch Parts I and II, and you use extra copies of page 2 if you have more than one student. Part III asks for the student's name and social security number as shown on page 1 of your return, the school's name, address, and EIN, and whether the student received Form 1098-T. Then come four yes or no questions on lines 23 through 26. A blocking answer on any of them sends you to line 31 for that student.

Page 1 does the math. Line 1 collects the totals from every Part III, line 30. Lines 2 through 6 compare your MAGI from Form 1040 or 1040-SR, line 11b, against $180,000 or $90,000 and turn the result into a decimal. Line 8 multiplies by 40% for the refundable part. In Part II, line 11 takes the smaller of your line 10 total or $10,000, line 12 multiplies that by 20%, and the Credit Limit Worksheet in the instructions shows how much of the nonrefundable credit your tax can absorb.

• The law requires you or the student to have received Form 1098-T from the school to claim either credit
• If the school is not required to furnish one, you can still claim a credit when you can show enrollment and substantiate what you paid
• If the school owes you a Form 1098-T and has not furnished it, request it after January 31, 2026 but before you file, and cooperate with the school
• Use the amounts you actually paid, which may differ from box 1 of Form 1098-T

Qualified education expenses are amounts paid in 2025 for tuition and fees required for the student's enrollment or attendance. It does not matter whether you paid in cash, by check, by credit or debit card, or with borrowed funds. For the American opportunity credit, course materials count as well, including books, supplies, and equipment needed for a course of study, whether or not you bought them from the school. For the lifetime learning credit, books, supplies, and equipment count only if the school requires you to pay it for them.

Room and board, insurance, medical expenses, transportation, and similar personal or family costs never count. Courses involving sports, games, or hobbies and noncredit courses are out unless the course is part of the degree program or, for the lifetime learning credit only, helps the student acquire or improve job skills. To get adjusted expenses, subtract tax-free help such as scholarships, employer-provided assistance, and veterans' educational assistance, plus refunds. Money paid in 2025 for a term starting in the first 3 months of 2026 counts for 2025 only, and amounts paid in 2024 or 2026 cannot be used.

If a refund of 2025 expenses or tax-free educational assistance arrives after you file your 2025 return, you may have to repay part of the credit. You refigure your adjusted expenses without that money, refigure the credit, and report the difference as additional tax for the year the money came in. The instructions give an example. You paid $8,000 in December 2025 and claimed a $1,600 lifetime learning credit, then received a $1,400 refund. Refigured on $6,600, the credit is $1,320, so you include the $280 difference as additional tax on your 2026 return.

If the refund arrives after 2025 but before you file, you simply reduce your 2025 qualified education expenses by that amount instead. One more rule to watch. If your American opportunity credit was denied or reduced for any reason other than a math or clerical error for a tax year beginning after 2015, you must attach Form 8862 to your return for the next year you claim the credit.