US education credits on Form 8863: American opportunity and lifetime learning credits, 2026 method with 2025 return notes

Figures are for tax year 2026 unless a line says 2025. The credit amounts and income limits are fixed in the statute, 26 U.S.C. §25A, and are the same for 2025 and 2026. The main change for 2026 is the Social Security number rule added by the One Big Beautiful Bill Act (P.L. 119-21, §70606). Related amounts that do move with inflation (student loan interest, preparer penalties) come from Rev. Proc. 2025-32 for 2026 and Rev. Proc. 2024-40 for 2025. A separate section covers 2025 returns, which are due by October 15, 2026 if the taxpayer got an extension.

Scope and who this is for

• Covers: US citizens and resident aliens who file Form 1040 and pay college or other postsecondary costs for themselves, a spouse or a dependent. It covers the American opportunity credit (AOTC) and the lifetime learning credit (LLC) on Form 8863, and how they interact with tax-free scholarships, 529 plans, Coverdell ESAs, employer educational assistance and the student loan interest deduction.
• Does not cover: state education credits or 529 deductions (each state has its own rules; check that state's own tax site), the qualified tuition reduction for school employees, student loan discharge, ABLE accounts, the business deduction for work-related education, and nonresident or dual-status returns (Form 1040-NR).
• 529 plans and Coverdell ESAs are covered only where they meet the credits. Their own rules are out of scope here; use Pub. 970, chapters 6 and 7 and the statutes. The main ones: 529 elementary and secondary expenses go beyond tuition, to curriculum, books, online materials, qualifying tutoring, test fees, dual-enrollment fees and educational therapies, for distributions after July 4, 2025 (§529(c)(7) and 2025 notes); postsecondary credentialing expenses, for distributions after July 4, 2025 (§529(e)(3)(C), (f)); registered apprenticeship costs (§529(c)(8)); computers, software and internet access used mainly by the beneficiary while enrolled (§529(e)(3)(A)(iii)); a change of beneficiary to a member of the beneficiary's family with no income tax consequences (Pub. 970, chapter 7); and the rule that a Coverdell balance must be distributed when the beneficiary reaches age 30, except as §530(d)(7) provides (§530(b)(1)(E)). The 529-to-Roth IRA rollover is covered elsewhere.
• Repealed item: the tuition and fees deduction (old §222) was repealed for tax years beginning after December 31, 2020 (§25A notes). Do not compute it for 2025 or 2026.

Ask the client first

• Which tax year are we working on, 2025 or 2026? What is the filing status? Married filing separately rules out both credits.
• Were the taxpayer and spouse US citizens or residents for the whole year? If either was a nonresident alien for any part of it, did they elect to be treated as residents?
• For 2026: does the taxpayer (or at least one spouse on a joint return) have an SSN that is valid for employment and was issued before the return's due date, including extensions? Does each dependent student have one? An ITIN or ATIN is not enough for 2026.
• Who claims the student as a dependent this year? If someone claims the student, only that person can take the credit.
• For each student: the degree or credential program, the enrollment load for each academic period (at least half-time?), the years of college finished before the year began, and every tax year in which anyone claimed the AOTC (or the older Hope credit) for this student.
• Has the student been convicted of a federal or state felony for possessing or distributing a controlled substance?
• Form 1098-T from each school, the school's EIN, and the bursar's account statement showing what was actually paid in the year and for which term. Also receipts for books and course materials bought elsewhere.
• Scholarships, grants (including Pell), veterans' benefits and employer-paid tuition, and whether each grant's terms allow it to be used for room and board.
• Any 529 plan or Coverdell ESA distributions (Form 1099-Q) and which expenses they paid.
• MAGI: AGI plus any excluded foreign earned income or housing, and excluded American Samoa or Puerto Rico income.
• Has the IRS ever denied or reduced an AOTC claim, and was the claim found reckless or fraudulent?
• The student's age at year end, whether a full-time student, earned income compared with support, whether a parent is alive, and whether the student files jointly. These decide whether the AOTC can be refundable on the student's own return.

The method, step by step

1. Check the bars before you compute anything. No credit at all if: the filing status is married filing separately; the taxpayer or spouse was a nonresident alien for any part of the year without a resident election; the taxpayer is claimed as someone else's dependent; or MAGI is at or above the ceiling (Form 8863 instructions, "Who cannot claim a credit"). For the AOTC only, also check the ban period after an improper claim and the Form 8862 requirement (§25A(b)(4)).
2. Apply the identification rule for the year. For 2026, the claimant needs a valid SSN (valid for employment, issued before the due date including extensions), and so does the student when the student is a dependent. On a joint return only one spouse needs one (2026 Form 8863 instructions, draft; Pub. 970). For 2025, a TIN (SSN, ITIN or ATIN) issued by the due date including extensions is enough: for the AOTC the filer and the student both need one, and for the LLC the student needs one (Form 8863 instructions).
3. Decide who claims each student. If the student is claimed as a dependent, all the student's expenses, including those paid by the student or by a third party, count as paid by the person claiming the student, and only that person can take a credit. If nobody claims the student, only the student can take it (Pub. 970, chapter 2).
4. Test each student for the AOTC. Every test must be met: the student had not completed the first 4 years of postsecondary education before the year began; the AOTC was not claimed for any 4 earlier tax years; the student was at least half-time in a degree or credential program for at least one academic period starting in the year; there was no felony drug conviction by year end; the TIN or SSN rule is met; Form 1098-T was received or an exception applies; and the school's EIN is on the form (Form 8863 instructions, "Student qualifications"). If any test fails, use the LLC for that student.
5. Add up the qualified expenses paid in the year for academic periods that begin in the year or in the first 3 months of the next year. Use the definitions for each credit in the boundary section below. Use what was paid, not what was billed and not what Box 1 of Form 1098-T shows.
6. Reduce to adjusted qualified education expenses. Subtract tax-free scholarships and grants, tax-free employer assistance, veterans' benefits, other tax-free aid for that period, and refunds. Then take out any expenses already used for a tax-free 529 or Coverdell distribution. If a grant may be used for room and board, test whether including it in the student's income gives a bigger credit (Form 8863 instructions, "Adjusted Qualified Education Expenses").
7. Compute the tentative credit. AOTC, per student: 100% of the first $2,000 plus 25% of the next $2,000. LLC, per return: 20% of up to $10,000 of the combined expenses of every student not claimed for the AOTC (§25A(b)(1), (c)(1)). Never claim both credits for the same student in the same year.
8. Apply the MAGI phase-out. Multiply each credit by (ceiling − MAGI) ÷ range: a $90,000 ceiling and a $10,000 range, or $180,000 and $20,000 on a joint return. At or above the ceiling the credit is zero (§25A(d)).
9. Split the AOTC. 40% of the AOTC left after the phase-out is refundable (Form 8863 Part I), unless the claimant falls within the under-24 rule, in which case all of it is nonrefundable (§25A(i); Form 8863 instructions, line 7).
10. Limit the nonrefundable part to tax with the Credit Limit Worksheet, and carry the result to Schedule 3 (Form 1040), line 3 (Form 8863 instructions, line 19).
11. Paid preparers: for a return claiming the AOTC, complete Form 8867, check the expenses actually paid rather than relying on Form 1098-T, and keep the records (Form 8867 instructions).

Figures with years

Credit amounts and income limits, 2026 and 2025 (26 U.S.C. §25A; Form 8863 instructions)

Item	2026	2025	Notes
AOTC maximum, per eligible student	$2,500	$2,500	100% of the first $2,000 and 25% of the next $2,000 of adjusted expenses
AOTC expenses that count, per student	up to $4,000	up to $4,000	Enter no more than $4,000 on Form 8863 line 27
AOTC refundable part	40% of the credit after the phase-out (at most $1,000 per student)	same	None if the under-24 rule applies
LLC maximum, per return	$2,000	$2,000	20% of up to $10,000, however many students
Phase-out, single, head of household, qualifying surviving spouse	Starts when MAGI is over $80,000; no credit at $90,000 or more	same	Applies to both credits
Phase-out, married filing jointly	Starts when MAGI is over $160,000; no credit at $180,000 or more	same	Applies to both credits
LLC student conditions	Any number of tax years; no degree or credential program needed; one or more courses; a felony drug conviction does not bar it	same	Form 8863 instructions, Table 1
Married filing separately	No credit	No credit	§25A(g)(6)

Not indexed. The $80,000 / $160,000 thresholds and the $10,000 / $20,000 ranges are written into §25A(d)(1). The 2020 law that aligned the LLC limits with the AOTC limits also struck the old LLC inflation adjustment (§25A notes). OBBBA did not change the amounts or the limits. It changed only the identification rule, for tax years beginning after December 31, 2025.

Related amounts that interact with the credits

Item	2026	2025	Source
Student loan interest deduction, maximum	$2,500	$2,500	Rev. Proc. 2025-32 §4.29
Student loan interest phase-out, other than joint	$85,000 to $100,000	$85,000 to $100,000	Rev. Proc. 2025-32; Rev. Proc. 2024-40 §2.30
Student loan interest phase-out, joint	$175,000 to $205,000	$170,000 to $200,000	Rev. Proc. 2025-32; Rev. Proc. 2024-40
Employer educational assistance exclusion (§127)	$5,250	$5,250	Indexed only for years beginning after 2026 (§127)
529 plan: elementary and secondary (K-12) expenses, per beneficiary per year: tuition and, for distributions after July 4, 2025, the wider list in the scope note	$20,000	$10,000 (Pub. 970 (2025) describes it as $10,000 of tuition)	§529(e)(3)(A) and notes
529 plan: student loan repayments, lifetime per individual	$10,000	$10,000	§529(c)(9)
Coverdell ESA contribution, per beneficiary	$2,000	$2,000	Reduced at MAGI $95,000 to $110,000, or $190,000 to $220,000 joint; not indexed (§530; Pub. 970, chapter 6)
Additional tax on the taxable part of a 529 or Coverdell distribution	10%	10%	Exceptions below (Pub. 970)
Preparer due-diligence penalty, per failure (§6695(g))	$665 (returns filed in 2027)	$650 (returns filed in 2026)	Rev. Proc. 2025-32; Rev. Proc. 2024-40

Boundary and exception table

Who can claim (26 U.S.C. §25A(g); Form 8863 instructions; Pub. 970)

Situation	Rule
Married filing separately	No AOTC and no LLC. A married taxpayer must file jointly (§25A(g)(6)).
Nonresident alien for any part of the year (taxpayer or spouse)	No credit unless the nonresident is treated as a resident by an election under §6013(g) or (h) (§25A(g)(7)).
Taxpayer is claimed as someone else's dependent	No credit on the taxpayer's own return.
Student claimed as a dependent	Only the person claiming the student can take a credit. Expenses paid by the student, or by a third party such as a grandparent, count as paid by that person.
Student could be claimed but is not	Only the student can take the credit, using expenses the student paid or is treated as paying (Pub. 970, chapter 2). The under-24 rule may make the AOTC wholly nonrefundable.
Tuition paid directly to the school under a court-approved divorce decree	Treated as paid by the student, and so by whoever claims the student (Pub. 970, chapter 2).
MAGI	AGI plus any foreign earned income or housing exclusion, and any excluded American Samoa or Puerto Rico income (§25A(d)(2)).
2026 identification	The claimant needs a valid SSN (valid for employment, issued before the due date including extensions). On a joint return one spouse is enough, even if the other spouse is the student. A dependent student needs one too. The IRS can treat a missing SSN as a math error, without a deficiency notice (§6213(g)(2)(J); 2026 draft instructions).
2025 identification	AOTC: the filer and the student must have a TIN issued by the due date including extensions, or there is no AOTC on the original or an amended return. An ITIN or ATIN applied for by the due date and then issued counts as issued on time. LLC: the student must have a TIN by the due date.

AOTC student tests (26 U.S.C. §25A(b); Form 8863 instructions; Pub. 970)

Test	Condition, with its boundary
First 4 years	The student had not completed the first 4 years of postsecondary education before the start of the tax year, as determined by the school. Credit given only for proficiency exams does not count. The graduate-student box on Form 1098-T is information, not the test itself.
4 prior tax years	The AOTC (or Hope credit) was claimed for this student, by anyone, for 3 or fewer earlier tax years. Count tax years claimed, not academic years.
Program and load	Enrolled in a program leading to a degree, certificate or other recognized credential and carrying at least half the normal full-time load, for at least one academic period beginning in the year. A period starting in the first 3 months of the next year counts if it was paid in this year.
Felony drug conviction	No federal or state felony conviction for possessing or distributing a controlled substance before the end of the tax year.
Form 1098-T	Needed for both credits, unless the school is not required to issue one, for example: qualified nonresident alien students, expenses paid entirely by scholarships, a formal billing arrangement, or courses with no academic credit. If a school that must issue one does not, the taxpayer or student must request it after the school's deadline (Pub. 970 gives February 2, 2026 for 2025 forms) and before filing, must cooperate with the school, and must be able to prove enrollment and payment.
School's EIN	Required on Form 8863 for the AOTC, not for the LLC.
Eligible school	Any college, university, vocational school or other postsecondary school eligible for federal student aid programs, including some schools abroad.

Qualified expenses for each credit (Form 8863 instructions, "Qualified Education Expenses"; §25A(f); Pub. 970)

Expense	AOTC	LLC
Tuition and fees required for enrollment or attendance	Yes	Yes
Books, supplies and equipment needed for the course	Yes, wherever bought	Only if they must be paid to the school as a condition of enrollment
Activity, athletic or other non-academic fees	Only if they must be paid to the school as a condition of enrollment	Same
Room and board, insurance, medical costs (including student health fees), transportation, personal costs	Never	Never
Sports, games, hobbies or non-credit courses	Only if part of the degree program	Also allowed if the course helps the student get or improve job skills
Courses to get or improve job skills, with no degree	No	Yes
Expenses paid with a loan	Count in the year paid, not when the loan is repaid	Same

No double benefit (Pub. 970; §25A(g)(2), (g)(5))

• Scholarships and grants: a tax-free scholarship reduces the expenses. A grant that by its terms may be used for non-qualified costs such as room and board can instead be included in the student's income, and the expenses it would have covered then stay available for the credit. This does not work for a grant that must be used for tuition, or for certain tribal government benefits. Emergency financial aid grants under the CARES Act, the 2021 Relief Act and the American Rescue Plan do not reduce the expenses.
• 529 plans and Coverdell ESAs: a credit can be claimed in the same year as a tax-free distribution, but not on the same expenses. Take the credit expenses out before working out the tax-free part of the distribution. If that makes part of the earnings taxable, the 10% additional tax does not apply to the part that is taxable only because the expenses were used for the AOTC or LLC (Pub. 970, chapters 6 and 7). Room and board for a student enrolled at least half-time is a qualified 529 expense, within limits, but never a credit expense (§529(e)(3)).
• Employer assistance (§127): expenses paid with tax-free employer assistance cannot be used for any other deduction or credit, including the AOTC and LLC. Employer payments of an employee's student loan principal or interest are covered by §127 permanently for payments after December 31, 2025, within the same annual limit. Interest paid that way cannot also be deducted as student loan interest (§127; Pub. 970, chapter 10).
• Business deductions: expenses deducted elsewhere, for example on Schedule C, cannot also be used for a credit.
• Student loan interest: a separate deduction. It is not allowed if the filing status is married filing separately, or if the taxpayer is claimed as someone else's dependent, and the taxpayer must be legally obliged to pay the loan (Pub. 970, chapter 4).

Refunds, prepayments and bans (Form 8863 instructions; §25A(b)(4))

Situation	Rule
Paid in December for a term starting January to March of the next year	Counts only in the year paid. Amounts paid in the year before or the year after never count.
Refund or tax-free aid received in the same year, or before the return is filed	Reduce that year's expenses.
Refund or tax-free aid received after the return is filed	Refigure the credit and add the difference as tax for the year the refund or aid was received (recapture).
Earlier AOTC finally found due to reckless or intentional disregard of the rules	No AOTC for the 2 tax years after the most recent tax year with that final determination.
Earlier AOTC finally found fraudulent	No AOTC for the 10 tax years after the most recent such tax year.
AOTC denied or reduced for any reason other than a math or clerical error, for a tax year beginning after 2015	Attach Form 8862 to the next return that claims the AOTC.
Under-24 rule (AOTC refundable part)	All nonrefundable if the claimant, at year end, was (a) under 18, or (b) 18 with earned income less than half of support, or (c) over 18 and under 24, a full-time student, with earned income less than half of support; and at least one parent was alive; and the claimant is not filing a joint return.

Worked cases

C1: AOTC in the phase-out (2026, married filing jointly). MAGI is $170,000. One dependent student is a full-time sophomore with no earlier AOTC claims and no conviction, and everyone has a valid SSN. Tuition and required fees paid in 2026 are $6,000, and there is a $1,000 tax-free grant, so adjusted expenses are $5,000. The tentative credit is 100% of $2,000 plus 25% of $2,000, which is $2,500. The phase-out fraction is ($180,000 − $170,000) ÷ $20,000 = 0.5, so the credit is $1,250. The refundable part is 40%, which is $500. The remaining $750 is nonrefundable and limited to tax (§25A; Form 8863 instructions).

C2: LLC for graduate school (2026, single). MAGI is $85,000. The taxpayer finished 4 years of college before 2026, so the AOTC is not available. They pay $12,000 of tuition and required fees for a master's program, and $800 for textbooks bought from an outside store that did not have to be paid to the school. The textbooks do not count for the LLC. The capped base is $10,000, and 20% of it is $2,000. The phase-out fraction is ($90,000 − $85,000) ÷ $10,000 = 0.5, so the LLC is $1,000, all nonrefundable (Form 8863 instructions).

C3: 529 distribution and AOTC in the same year (2026, joint, MAGI below $160,000). A freshman living at home has $10,000 of tuition and fees. The 529 plan pays out $10,000, of which $2,000 is earnings. The parents claim the AOTC on $4,000 of those expenses, so the credit is $2,500. The expenses left for the 529 distribution are $6,000. The tax-free earnings are $2,000 × $6,000 ÷ $10,000 = $1,200. The other $800 of earnings is taxable, but the 10% additional tax does not apply to it, because it is taxable only because those expenses were used for the credit (Pub. 970, chapter 7). Planning point: if the student had been at least half-time with room and board charges to put against the 529, the whole distribution could have stayed tax-free.

C4: Choosing to include a Pell grant in income (2025 facts, from the Form 8863 instructions). Qualified expenses are $5,000 and room and board is $4,000. A $5,000 Pell grant may be used for either. If the whole grant is applied to tuition, the adjusted expenses are $0 and so is the credit. If $4,000 of the grant is applied to room and board and included in the student's income, only $1,000 of the grant is tax-free. Adjusted expenses are then $4,000, giving a refundable AOTC of $1,000 and a nonrefundable credit of up to $1,500, depending on tax (Form 8863 instructions, Example 2). If the student is the claimant and claims the earned income credit, the extra income can reduce that credit, so test both ways.

C5: 2026 SSN rule, family with ITINs (decision case). A married couple files jointly. One spouse has an SSN valid for employment and the other has an ITIN. Their dependent college student has only an ITIN. For 2026, the joint return meets the claimant rule because one spouse has a valid SSN. But there is no AOTC or LLC for the dependent student's expenses, because the student has no valid SSN issued before the due date. If the ITIN spouse were the student, the credit would still be allowed, since only one spouse needs a valid SSN (2026 draft instructions; §25A(g)(1)). For 2025, an ITIN issued by the due date of the 2025 return (including extensions) was enough (Pub. 970).

C6: Filing status and residence bars (decision case). A married taxpayer paying their own tuition files separately. There is no AOTC and no LLC, whatever the MAGI. In a second family, one spouse was a nonresident alien for part of the year. There is no credit unless the couple elects under §6013(g) or (h) to treat that spouse as a resident, and then files jointly (§25A(g)(6), (g)(7)).

C7: Student claims the AOTC on their own return (decision case). The year is 2026. The student is 20, single and full-time, with earned income under half of their support and MAGI of $12,000. Both parents are alive. The student is in the second year of a degree program, with no earlier AOTC claims, and has a valid SSN. Tuition and required fees paid are $6,000, with no tax-free aid, so the $4,000 AOTC expense cap is reached and there is no phase-out. The parents are entitled to claim the student but choose not to, so only the student can claim. All $2,500 of the AOTC is nonrefundable, and it helps only if the student owes tax (Form 8863 instructions, line 7; Pub. 970, chapter 2). Before recommending this, compare it with the parents' credit after their phase-out, and with anything else they lose by not claiming the student.

C8: Refund after filing (recapture; 2025 facts from the Form 8863 instructions). $8,000 of tuition was paid in December 2025 for a spring 2026 term. The LLC claimed on the 2025 return was $1,600. After filing, a $1,400 refund arrived for dropped courses. The refigured 2025 credit is ($8,000 − $1,400) × 20% = $1,320. The difference of $280 is added as tax on the 2026 return (Form 8863 instructions, "Credit recapture").

2025 returns: what is different (Form 8863 instructions (2025))

• The credit amounts, the $80,000 / $160,000 phase-out start and the $90,000 / $180,000 ceilings are the same as for 2026.
• Identification: a TIN (SSN, ITIN or ATIN) issued by the due date of the 2025 return, including extensions, is enough. The AOTC needs one for the filer and the student; the LLC needs one for the student. The 2026 valid-SSN rule does not apply to 2025 returns.
• The first-4-years and 4-prior-years tests look at years before 2025. A term beginning January to March 2026 counts for 2025 if it was paid in 2025.
• Student loan interest for 2025 phases out between $85,000 and $100,000, or $170,000 and $200,000 on a joint return (Rev. Proc. 2024-40). The 529 elementary and secondary limit for 2025 is $10,000.
• Deadline: extended 2025 returns are due October 15, 2026. The extension moves only the filing date; tax was due by the April filing date (IRS extensions page). A credit missed on a 2025 return can be claimed on an amended return, but only if the AOTC TIN rule above was met by the due date including extensions.

When to refuse or refer

• Refuse an AOTC where any student test fails, or where the expenses cannot be supported beyond Form 1098-T. A paid preparer must verify the amounts actually paid (Form 8867 instructions).
• Refuse the AOTC for any return in a ban period, and do not leave out Form 8862 where it is required (§25A(b)(4)).
• Refer nonresident or dual-status taxpayers, including whether to make a §6013(g) or (h) election, to a specialist and Pub. 519.
• Refer the qualified tuition reduction for school employees, teaching or research stipends (payment for services is taxable), and athletic or NIL arrangements. Pub. 970, chapter 1, sets the scholarship rules; apply them to the award letter.
• Flag as not final: the details of the 2026 identification rule come from the IRS draft 2026 Form 8863 instructions. Recheck the final 2026 instructions and the 2026 Pub. 970 before filing 2026 returns (IRS Form 8863 page).
• Refer state treatment, including state 529 deductions and recapture. Tell the client to check the state's own tax site.

Filing and payment

• Attach Form 8863 to Form 1040 or 1040-SR. Complete a separate Part III for each student before Parts I and II. The refundable AOTC goes on Form 1040, line 29. The nonrefundable credits go on Schedule 3 (Form 1040), line 3 (Pub. 970).
• 2025 Form 8863 Part III lines: 23, AOTC claimed for 4 earlier years; 24, at least half-time in a credential program; 25, first 4 years completed before 2025; 26, felony drug conviction; 27 to 30, AOTC; 31, LLC (Form 8863 instructions). Check the numbering on the final 2026 form.
• Keep the Form 1098-T, the bursar's statements, receipts for course materials, scholarship award letters and Forms 1099-Q with the return file.
• Paid preparers: file Form 8867 with any return claiming the AOTC. Keep a copy of it, the worksheets, the client documents relied on, and a record of the questions asked and the answers, for 3 years from the latest of the dates in the Form 8867 instructions. The penalty is $650 per failure for returns filed in 2026 (Rev. Proc. 2024-40) and $665 for returns filed in 2027 (Rev. Proc. 2025-32); see §6695(g).
• Deadlines: 2026 returns are due by the April 2027 filing date; check the exact date in the 2026 Form 1040 instructions. An extension moves only the filing date, to October 15 (IRS extensions page).

Completion checklist

• Tax year, filing status and residence are confirmed: not married filing separately, and no part-year nonresident without an election (§25A(g)).
• 2026: a valid SSN for the claimant (one spouse on a joint return) and for each dependent student, issued before the due date. 2025: a TIN issued by the due date.
• Each student is claimed by exactly one person, and the credit is on that person's return.
• The AOTC tests (first 4 years, 4 prior tax years, program and load, felony, Form 1098-T, EIN) were checked student by student. Otherwise the LLC was used, and never both for one student.
• Expenses are amounts paid for eligible terms, reduced by tax-free aid and refunds. 529, Coverdell and §127 money was not used for the same expenses. Including a grant in income was tested where the grant allows it.
• AOTC expenses are capped at $4,000 per student and LLC expenses at $10,000 per return. The phase-out used the unindexed limits ($80,000 to $90,000; $160,000 to $180,000 joint).
• The under-24 rule was checked before showing any refundable AOTC, and the nonrefundable part is limited to tax.
• The ban period and Form 8862 were checked for any earlier denied AOTC.
• Paid preparer: Form 8867 is completed and the records are kept for 3 years.
• State treatment was referred separately.