What this line means
The total tentative education credits before income limitations are applied. This line adds two amounts: the nonrefundable portion (60%) of the American Opportunity Tax Credit from line 7, plus the Lifetime Learning Credit from line 8. 1 Both credits get reduced together in lines 10 through 18 based on your modified AGI. Think of this as the combined education credit ceiling before the IRS checks whether your income is too high.
Does this apply to you?
- You are claiming the nonrefundable portion of the AOTC (60% of the credit from Part I)
- You are claiming the Lifetime Learning Credit for any student
- You are claiming both credits for different students in the same tax year
- Your modified AGI determines how much of this tentative amount you actually get to use
Easy to overlook
You can claim the AOTC for one student and the LLC for another on the same return The AOTC and LLC cannot apply to the same student in the same year, but they can apply to different students. A parent paying tuition for a freshman (AOTC-eligible) and a graduate student (LLC-eligible) benefits from both credits. This line combines them. 2 IRS Publication 970 — Comparing education credits
The LLC uses a different expense cap than the AOTC The Lifetime Learning Credit on line 8 is 20% of up to $10,000 in combined qualified expenses for all students — a maximum of $2,000 per return. The AOTC on line 7 is calculated per student with a $2,500 cap each. These different formulas merge on this line, and the income phase-out applies to the combined total. 3 IRS Form 8863 instructions — Line 9
Watch out for this
The income phase-out on lines 10 through 18 applies to this entire combined amount, not to each credit separately. If your modified AGI exceeds $80,000 (single) or $160,000 (married filing jointly), the reduction hits both the nonrefundable AOTC and the LLC proportionally. At $90,000 single or $180,000 MFJ, the nonrefundable credits are completely eliminated. The refundable AOTC (40%, calculated on line 4) undergoes a separate phase-out in Part I.
Footnotes
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IRS Form 8863 Instructions, Part II — Nonrefundable Education Credits. https://www.irs.gov/instructions/i8863 ↩
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IRS Publication 970, Tax Benefits for Education, Chapter 3 — Comparing the Credits. https://www.irs.gov/pub/irs-pdf/p970.pdf ↩
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IRS Form 8863 Instructions, Lines 7-9. https://www.irs.gov/instructions/i8863 ↩