What Form 8863 covers: AOTC vs. LLC
The AOTC is worth up to $2,500 per student and covers the first four years of college. The LLC is worth up to $2,000 per tax return, with no year limit, and can cover grad school or job-skills courses.
Form 8863 helps you calculate the credit you’re claiming for each eligible student. You can claim both credits on the same return, but not for the same student.
What you need before you start
Have these three things on hand before you open Form 8863, since you’ll likely need all of them to fill it out correctly:
- Form 1098-T from the school (if required)
- The school’s employer identification number (EIN) (only applies to the AOTC)
- Your modified adjusted gross income (MAGI) (your adjusted gross income, plus certain deductions and tax-exempt income)
Once you have your information gathered, fill out Form 8863 and attach the completed form to your Form 1040.
How Form 8863 is organized: Parts I, II, and III
| Part | What it calculates |
|---|---|
| Part I | Your American Opportunity Credit (the 40% refundable portion) |
| Part II | Your nonrefundable education credits, including the Lifetime Learning Credit |
| Part III | Each student’s eligible expenses and credit amount |
Source: Internal Revenue Service
Complete Part III for each eligible student first, then use those amounts to complete Parts I and II.
Common Form 8863 mistakes to avoid
A few errors show up frequently on this form, and each one can potentially cause issues when you file:
- Filling out Part I before completing Part III for each student
- Forgetting the school’s EIN when claiming the AOTC
- Trying to claim both the AOTC and LLC for the same student
