Form 8863 K – Fill Out and Use This PDF

Purpose of Form—Use Form 8863-K to calculate and claim your education credits. The education credits are: the Hope Credit and the Lifetime Learning Credit. These credits are based on qualified education expenses paid to an eligible postsecond- ary educational institution located in Kentucky. If you elected to claim the education credit for federal purposes rather than the tuition and fees deduction, you must make that same elec- tion for Kentucky purposes.

Caution: Requirements for the 2011 Kentucky EducationTuition Tax Credit are different from the federal education require- ments due to Kentucky not adopting the American Recovery and Reinvestment Act of 2009.

Qualified Education Expenses—Generally, qualified educa- tion expenses are amounts paid in 2011 for tuition and fees required for the student’s enrollment or attendance at an eli- gible educational institution. It does not matter whether the expenses were paid in cash, by check, by credit card, or with borrowed funds.

Eligible Educational Institution located in Kentucky—An eli- gible educational institution is generally any accredited public, nonprofit, or private college, university, vocational school, or other postsecondary institution. Also, the institution must be eligible to participate in a student aid program administered by the Department of Education. The institution must also be physically located in Kentucky to qualify.

Part I, Qualifications—All questions in Part I must be answered yes to be eligible for the Kentucky Education Tuition Tax Credit.

Part II, Hope Credit—You may be able to take a credit of up to 25% of $1,800 for qualified education expenses paid for each student who qualifies for the Hope Credit. The Hope Credit equals 100% of the first $1,200 and 50% of the next $1,200 of qualified expenses paid for each eligible student. For Ken- tucky, the credit is then limited to 25% for a maximum amount allowed of $450 for each student who qualified. You can take the Hope Credit for a student if all of the following apply.

•฀ As฀of฀the฀beginning฀of฀2011,฀the฀student฀had฀not฀complet- ed the first 2 years of postsecondary education (gener- ally, the freshman and sophomore years of college), as determined by the eligible educational institution. For this purpose, do not include academic credit awarded solely because of the student’s performance on proficiency ex- ams.

•฀ The฀student฀was฀enrolled฀in฀2011฀in฀a฀program฀that฀leads฀ to a degree, certificate, or other recognized educational credential.

•฀ The฀student฀was฀taking฀at฀least฀one-half฀the฀normal฀full- time workload for his or her course of study for at least one academic period beginning in 2011.

•฀ The฀ Hope฀ Credit฀ was฀ not฀ claimed฀ for฀ that฀ student’s฀ ex- penses in more than one prior tax year.

•฀ The฀ student฀ has฀ not฀ been฀ convicted฀ of฀ a฀ felony฀ for฀ pos- sessing or distributing a controlled substance.

Note: If a student does not meet all of the above qualifica- tions, you may be able to take the Lifetime Learning Credit for part or all of the student’s qualified education expenses.

Line 1, Columns A and B—Enter student’s name, Social Secu- rity number and the name and address of qualified Kentucky institution.

Line 1, Column C—Enter qualified expenses; do not enter more than $2,400 for each student.

Line 1, Column D—Enter the amount from Column C or $1,200, whichever is smaller.

Line 1, Column E—Add Column C and Column D.

Line 1, Column F—Enter one-half of the amount in Column E.

Line 2—Add all amounts in Column F for all students to com- pute your tentative Hope credit. If you have expenses for more than two students, attach a list to Form 8863-K and list the total for all students on Line 2. If you are taking the Lifetime Learn- ing Credit for another student, go to Part III; otherwise go to Part IV.

Part III—Lifetime Learning Credit—You may be able to take 25% of the Lifetime Learning Credit that equals 20% of quali- fied expenses paid, up to a maximum of $10,000 of qualified expenses per return. The maximum amount of Lifetime Learn- ing Credit you can claim on your tax return for the tax year is $2,000. For Kentucky, the Lifetime Learning Credit is then limited to 25% of the $2,000 for a maximum allowed of $500 per return.

Line 3, Column A–D—Enter student’s name, Social security number, name and address of qualified Kentucky institution and amount of qualified expenses.

Line 4—Add all amounts in Column D for all students.

Line 5—Enter the smaller of Line 4 or $10,000.

Line 6—Multiply Line 5 by 20%. Do not enter more than $2,000. This is your tentative Lifetime Learning Credit.

Line 7—Add Line 2 (tentative Hope Credit) and Line 6 (tenta- tive Lifetime Learning Credit) to get your tentative Kentucky Education Credits. Enter the amount on Line 7 and on page 2, Line 8.

Part IV—Allowable Education Credits—

Line 9 – Line 13—You cannot take any Kentucky Education Credits if your federal adjusted gross income (federal Form 1040, Line 37 or 1040A, Line 21) exceeds $122,000 if married, filing jointly or married, filing separately on a combined return ($61,000 if single). If you are filing a separate return, you do not qualify for this credit. If your income is greater than $100,000, you may only be entitled to a portion of the credits, if any. Pro- ceed to Line 14 if your income is less than $100,000.

Line 14—Enter the amount from Line 8 if your credit was not limited based on income. If the credit was limited based on income, multiply the amount on Line 8 by the decimal amount on Line 13.

Line 15—Multiply Line 14 by 25% (.25). This is your tentative Kentucky allowable credit.

Line 16—Enter the tentative tax from Form 740 or Form 740-NP, page 1, Line 22.

Line 17—Enter the amount from page 2, Part V, Line 37. This is the allowable credit carryforward from prior year(s). If there is no carryforward, enter zero.

Line 18—Subtract Line 17 from Line 16.

Line 19—Enter the smaller of Line 18 or Line 15.

Line 20—Add Lines 17 and 19. Enter here and on Form 740 or Form 740-NP, Line 23. This is your allowable 2011 education credit.

Line 21—If Line 18 is smaller than Line 15, subtract Line 18 from Line 15. This is the amount of unused credit carryforward from 2011 to 2012. Maintain records for following years.

Part V, Credit Carryforward from Prior Years—The Kentucky Education Tuition Tax credit can be carried forward for up to 5 years if unused during the preceding tax year(s). You must have completed Form 8863-K for any prior year in which you are claiming a credit carryforward.