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Form 8863 Education Credits (Hope and Lifetime Learning Credits) See instructions to find out if you are eligible to take the credits. Attach to Form 1040 or Form 1040A. OMB No. 1545-0074 Department of the Treasury Internal Revenue Service (99) Attachment Sequence No. 2007 50 Name(s) shown on return Your social security number Caution: ● You cannot take the Hope credit and the lifetime learning credit for the same student in the same year. ● You cannot take both an education credit and
  OMB No. 1545-0074  Education Credits  Form 8863  See instructions to find out if you are eligible to take the credits.  Department of the TreasuryInternal Revenue Service   AttachmentSequence No. 50   Your social security number Name(s) shown on return Hope Credit. Caution: You cannot take the Hope credit for more than  2 tax years for the  same student. 1 2  Lifetime Learning Credit  Form 8863 (2007) Part I Part II  2 (a) Student’s name(as shown on page 1of your tax return)  Cat. No. 25379M  Tentative Hope credit.  Add the amounts on line 1, column (f). If you are taking the lifetime learningcredit for another student, go to Part II; otherwise, go to Part III   7   Add the amounts on line 3, column (c), and enter the total  8 8  Enter the smaller of line 4 or $10,000  9  Subtract line 9 from line 8. If zero or less, stop; you cannot take anyeducation credits  9 11 3 10 10 14  For Paperwork Reduction Act Notice, see page 3.  (f) Enter one-halfof the amount incolumn (e)  (e)  Addcolumn (c) andcolumn (d)  (d) Enter the smaller of theamount incolumn (c) or$1,100  (c) Qualifiedexpenses (seeinstructions). Donot enter morethan $2,200 foreach student.  Caution: (a) Student’s name (as shown on page 1 of your tax return)  First name Last name  (c) Qualifiedexpenses (seeinstructions)  Tentative lifetime learning credit. Multiply line 5 by 20% (.20) and go to Part III  4 5 4 5 6  Part III   Allowable Education Credits  Tentative education credits. Add lines 2 and 6  7  Enter: $114,000 if married filing jointly; $57,000 if single, head of household,or qualifying widow(er) Enter the amount from Form 1040, line 38*, or Form 1040A, line 22 If line 10 is equal to or more than line 11, enter the amount from line 7 on line 13 and go toline 14. If line 10 is less than line 11, divide line 10 by line 11. Enter the result as a decimal(rounded to at least three places)  12  Multiply line 7 by line 12   13  Enter the amount from Form 1040, line 46, or Form 1040A, line 28  14 13 12    .  (Hope and Lifetime Learning Credits)  (b) Student’ssocial securitynumber (asshown on page 1of your tax return)  (b) Student’s social securitynumber (as shown on page1 of your tax return)  Enter: $20,000 if married filing jointly; $10,000 if single, head of household,or qualifying widow(er)  11    Attach to Form 1040 or Form 1040A.  Last name First name  15  Enter the total, if any, of your credits from Form 1040, lines 47, 48, and51; or Form 1040A, lines 29 and 30  (99)  6  20 07  15  *If you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from Puerto Rico, see Pub. 970 for the amount to enter.  ● You cannot take the Hope credit and the lifetime learning credit for the  same student  in the same year.  ● You cannot take both an education credit and the tuition and fees deduction (see Form 8917) for the  same student  in the same year.  Subtract line 15 from line 14. If zero or less, stop. You cannot take any education credits   16 Education credits. Enter the smaller of line 13 or line 16 here and on Form 1040, line 49, orForm 1040A, line 31   17 17 Before you begin: Figure the amount of any credit you are claiming on Form 1040, line 51.  16   Page 2 Form 8863 (2007) General Instructions  Use Form 8863 to figure and claim your education credits. Theeducation credits are:  ● The Hope credit, and  ● The lifetime learning credit.  Who Can Take the Credits  You cannot take the education credits if any of the followingapply.  ● Your filing status is married filing separately.  ● Your adjusted gross income on Form 1040, line 38, or Form1040A, line 22, is (a) $114,000 or more if married filing jointly, or(b) $57,000 or more if single, head of household, or qualifyingwidow(er).  ● You are claimed as a dependent on another person’s taxreturn, such as your parent’s return (but see the Note above). See Pub. 970, Tax Benefits for Education, for more informationabout these credits.  Rules That Apply to Both Credits  Qualified Education Expenses  Generally, qualified education expenses are amounts paid in2007 for tuition and fees required for the student’s enrollment orattendance at an eligible educational institution. It does notmatter whether the expenses were paid in cash, by check, bycredit card, or with borrowed funds.  ● Course-related books, supplies, equipment, and nonacademicactivities, except for fees required to be paid to the institution asa condition of enrollment or attendance.  ● Room and board, insurance, medical expenses (includingstudent health fees), transportation, or other similar personal,living, or family expenses.  ●  Any course or other education involving sports, games, orhobbies, or any noncredit course, unless such course or othereducation is part of the student’s degree program or (for thelifetime learning credit only) helps the student to acquire orimprove job skills. If you or the student take a deduction for higher educationexpenses, such as on Schedule A or Schedule C (Form 1040),you cannot use those expenses when figuring your educationcredits. Qualified education expenses do not include amounts paid for:  Tax-Free Educational Assistance and Refunds ofQualified Education Expenses  You must reduce the total of your qualified educationexpenses by any tax-free educational assistance and by anyrefunds of your expenses. If the refund or tax-free assistance isreceived in the same year in which the expenses were paid or inthe following year before you file your tax return, reduce yourqualified education expenses by the amount received and figureyour education credits using the reduced amount of qualifiedexpenses. If the refund or tax-free assistance is received afteryou file your return for the year in which the expenses were paid,you must figure the amount by which your education creditswould have been reduced if the refund or tax-free assistancehad been received in the year for which you claimed theeducation credits. Include that amount as an additional tax forthe year the refund or tax-free assistance was received. Tax-free educational assistance includes a tax-free scholarshipor Pell grant or tax-free employer-provided educationalassistance. See Pub. 970 for specific information. You may be able to take the credits if you, your spouse, or adependent you claim on your tax return was a student enrolledat or attending an eligible educational institution. The credits arebased on the amount of qualified education expenses paid forthe student in 2007 for academic periods beginning in 2007 andthe first 3 months of 2008.  Note. If a student is claimed as a dependent on anotherperson’s tax return, only the person who claims the student as adependent can claim the credits for the student’s qualifiededucation expenses. If a student is not claimed as a dependenton another person’s tax return, only the student can claim thecredits. Generally, qualified education expenses paid on behalf of thestudent by someone other than the student (such as a relative)are treated as paid by the student. Also, qualified educationexpenses paid (or treated as paid) by a student who is claimedas a dependent on your tax return are treated as paid by you.Therefore, you are treated as having paid expenses that werepaid from your dependent student’s earnings, gifts, inheritances,savings, etc.   Additional Information  ● You (or your spouse) were a nonresident alien for any part of2007 and the nonresident alien did not elect to be treated as aresident alien.   Any qualified expenses used to figure the educationcredits cannot be taken into account in determiningthe amount of a distribution from a Coverdell ESAor a qualified tuition program that is excluded from gross income. Qualified education expenses must be reduced by  any expenses paid directly or indirectly usingtax-free educational assistance. See Tax-FreeEducational Assistance and Refunds of QualifiedEducation Expenses on this page.  CAUTION CAUTION  Purpose of Form  You should receive Form 1098-T, Tuition Statement, from thecollege or university reporting either payments received in box 1or amounts billed in box 2. However, the amounts in boxes 1 and2 of Form 1098-T may be different than what you actually paid.On Form 8863, lines 1 and 3, enter only the amounts you paid in2007 for qualified expenses. See chapters 2 and 3 of Pub. 970. These credits are based on qualified education expenses paidto an eligible postsecondary educational institution. See QualifiedEducation Expenses and Eligible Educational Institution, later, formore information.  You cannot use any amount paid in 2006 or 2008to figure your 2007 education credits.  CAUTION  Qualified education expenses paid in 2007 for an academicperiod that begins in the first 3 months of 2008 can be used onlyin figuring your 2007 education credits. For example, if you pay$2,000 in December 2007 for qualified tuition for the 2008 winterquarter that begins in January 2008, you can use that $2,000 infiguring your 2007 education credits (if you meet all the otherrequirements).  Prepaid Expenses   Example. You paid $8,000 tuition and fees in December 2006,and your child began college in January 2007. You filed your2006 tax return on February 2, 2007, and claimed a lifetimelearning credit of $1,600. After you filed your return, your childdropped two courses and you received a refund of $1,400. Youmust refigure your 2006 lifetime learning credit using $6,600 ofqualified expenses instead of $8,000. The refigured credit is$1,320. You must include the difference of $280 on your 2007Form 1040, line 44, or Form 1040A, line 28. Also, enter “$280”and “ECR” on the dotted line next to line 44 (if filing Form 1040)or line 28 (Form 1040A).   Page 3 Form 8863 (2007) Specific Instructions  Part IHope Credit  Complete columns (a) through (f) on line 1 for each student whoqualifies for and for whom you elect to take the Hope credit.  Column (c). For each student, enter the amount of qualifiededucation expenses remaining after reduction by certain tax-freeamounts and refunds, as explained earlier. The expenses musthave been paid for the student in 2007 for academic periodsbeginning after 2006 but before April 1, 2008, as explainedearlier under Prepaid Expenses. If the student’s expenses aremore than $2,200, enter $2,200. You may use the worksheet thatfollows to figure the correct amount to enter in column (c).  Note. If you have more than three students who qualify for theHope credit, enter “See attached” next to line 1 and attach astatement with the required information for each additionalstudent. Include the amounts from line 1, column (f), for allstudents in the total you enter on line 2.  ● The student was taking at least one-half the normal full-timeworkload for his or her course of study for at least one academicperiod beginning in 2007.  ● The student has not been convicted of a felony for possessingor distributing a controlled substance.  If a student does not meet all of the aboveconditions, you may be able to take the lifetime learning credit for part or all of that student’squalified education expenses instead.  ● The student was enrolled in 2007 in a program that leads to adegree, certificate, or other recognized educational credential. You may be able to take a credit of up to $1,650 for qualifiededucation expenses (defined earlier) paid for each student whoqualifies for the Hope credit. The Hope credit equals 100% of thefirst $1,100 and 50% of the next $1,100 of qualified expensespaid for each eligible student. You can take the Hope credit for astudent if all of the following apply.  ●  As of the beginning of 2007, the student had not completedthe first 2 years of postsecondary education (generally, thefreshman and sophomore years of college), as determined by theeligible educational institution. For this purpose, do not includeacademic credit awarded solely because of the student’sperformance on proficiency examinations.  ● The Hope credit was not claimed for that student’s expensesin more than one prior tax year.  TIP  Line 1   An eligible educational institution is generally any accreditedpublic, nonprofit, or proprietary (private) college, university,vocational school, or other postsecondary institution. Also, theinstitution must be eligible to participate in a student aidprogram administered by the Department of Education. Virtuallyall accredited postsecondary institutions meet this definition.  Eligible Educational Institution  Part IILifetime Learning Credit  Line 3  Complete columns (a) through (c) for each student for whom youare taking the lifetime learning credit.  You cannot take the lifetime learning credit for any  student for whom you are taking the Hope credit.  The maximum lifetime learning credit you can claim on yourreturn for the year is $2,000, regardless of the number ofstudents for whom you are claiming the credit.  CAUTION  Qualified Education Expenses Worksheet for Column (c) (Do a separate worksheet for each student)  1. Total qualified education expenses  2. Less adjustments:  a. Tax-free educational assistance  b. Refunds of qualified educationexpenses  c. Other adjustments (see Pub. 970)  3. Total adjustments (add lines 2a–2c)  4. Qualified education expenses (subtract line 3 fromline 1). Enter here and on Form 8863, Part I or II,column (c)  Column (c). For each student, enter the amount of qualifiededucation expenses remaining after reduction by certain tax-freeamounts and refunds, as explained earlier. The expenses musthave been paid for the student in 2007 for academic periodsbeginning after 2006 but before April 1, 2008, as explainedearlier under Prepaid Expenses. You may use the worksheet onthis page to figure the correct amount to enter in column (c).  Note. If you are taking the lifetime learning credit for more thanthree students, enter “See attached” next to line 3 and attach astatement with the required information for each additionalstudent. Include the amounts from line 3, column (c), for allstudents in the total you enter on line 4.  Paperwork Reduction Act Notice. We ask for the information on thisform to carry out the Internal Revenue laws of the United States. Youare required to give us the information. We need it to ensure that youare complying with these laws and to allow us to figure and collect theright amount of tax. You are not required to provide the information requested on aform that is subject to the Paperwork Reduction Act unless the formdisplays a valid OMB control number. Books or records relating to aform or its instructions must be retained as long as their contents maybecome material in the administration of any Internal Revenue law.Generally, tax returns and return information are confidential, asrequired by Internal Revenue Code section 6103.  The average time and expenses required to complete and filethis form will vary depending on individual circumstances. Forthe estimated averages, see the instructions for your income taxreturn. If you have suggestions for making this form simpler, wewould be happy to hear from you. See the instructions for yourincome tax return. 
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