Appendix A. Illustrated Example of Education Credits Form 8863

Appendix A (Continued) Form 8863 Dave and Valerie Jones Education Credits (Hope and Lifetime Learning Credits) See instructions on pages 2 and 3. Attach to Form 1040 or Form 1040A. OMB No. 1545-1618 Department of the Treasury Internal Revenue Service Attachment Sequence No. 2000 51 00 6543 Name(s) shown on return Your social security number 987 Part I 1 Hope Credit. Caution: The Hope credit may be claimed for no more than 2 tax years for the same student. (b) Student’s social security number (as shown on page 1 of your tax return) (c) Qualified expenses (but do not enter more than $2,000 for each student). See instructions (d) Enter the smaller of the amount in column (c) or $1,000 (a) Student’s name (as shown on page 1 of your tax return) First, Last (e) Subtract column (d) from column (c) (f) Enter one-half of the amount in column (e) Corey, Jones 137 00 9642 2,000 1,000 1,000 500 2 3 Add the amounts in columns (d) and (f) 2 1,000 3 500 1,500 Tentative Hope credit. Add the amounts on line 2, columns (d) and (f) Lifetime Learning Credit (a) Student’s name (as shown on page 1 of your tax return) Last Part II 4 Caution: You cannot take the Hope credit and the lifetime lear ning credit for the same student. 5 6 7 First (b) Student’s social security number (as shown on page 1 of your tax return) (c) Qualified expenses. See instructions Sean Jones 246 00 9731 2,200 Add the amounts on line 4, column (c), and enter the total Enter the smaller of line 5 or $5,000 Tentative lifetime learning credit. Multiply line 6 by 20% (.20) Allowable Education Credits 5 6 7 2,200 2,200 440 Part III 8 9 10 11 12 13 Tentative education credits. Add lines 3 and 7 Enter: $100,000 if married filing jointly; $50,000 if single, head of 100,000 9 household, or qualifying widow(er) 82,000 10 Enter the amount from Form 1040, line 34 (or Form 1040A, line 20)* Subtract line 10 from line 9. If line 10 is equal to or more than 18,000 11 line 9, stop; you cannot take any education credits Enter: $20,000 if married filing jointly; $10,000 if single, head of 20,000 12 household, or qualifying widow(er) If line 11 is equal to or more than line 12, enter the amount from line 8 on line 14 and go to line 15. If line 11 is less than line 12, divide line 11 by line 12. Enter the result as a decimal (rounded to at least three places) Multiply line 8 by line 13 Enter the amount from Form 1040, line 42 (or Form 1040A, line 26) Enter the total, if any, of your credits from Form 1040, lines 43 through 45 (or from Form 1040A, lines 27 and 28) Subtract line 16 from line 15. If line 16 is equal to or more than line 15, stop; you cannot take any education credits Education credits. Enter the smaller of line 14 or line 17 here and on Form 1040, line 46 (or Form 1040A, line 29) Cat. No. 25379M 8 1,940 13 14 15 16 17 18 Form . 900 1,746 9,475 0 9,475 1,746 8863 (2000) 14 15 16 17 18 *See Pub. 970 for the amount to enter if you are filing Form 2555, 2555-EZ, or 4563 or you are excluding income from Puerto Rico. For Paperwork Reduction Act Notice, see page 4. Page 33

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