Use Form 8863 to figure and claim your education credits, which are based on qualified education expenses paid to an eligible postsecondary educational institution. There are two education credits.
- The American Opportunity Credit, part of which may be refundable.
- The Lifetime Learning Credit, which is nonrefundable.
What Is a Tax Credit?
Subtract tax credits from the amount of tax you owe. There are two types of tax credits:
- A nonrefundable tax credit means you get a refund only up to the amount you owe.
- A refundable tax credit means you get a refund, even if it’s more than what you owe.
What Is a Tax Deduction?
Subtract tax deductions from your income before you figure the amount of tax you owe.