Bernadette, a longtime client of yours, is an architect and the president of the local Rotary chapter. To keep up to date with the latest developments in her profession, she attends continuing education seminars offered by the architecture school at State University. During2012, Bernadette spends $2,000 on course tuition to attend such seminars. She also spends another $400 on architecture books during the year. Bernadette?s son is a senior majoring in engineering at the University of the Midwest. During the 2012 calendar year, Bernadette?s son incurs the following expenses $8,200 for tuition ($4,100 per semester) and $750 for books and course materials. Bernadette?s son, whom she claims as a dependent, lives at home while attending school full-time. Bernadette is married, files a joint return, and has a combined AGI with her husband of $103,000. Prepare 2011 form 8863. Create tax payers last name and social security number. Assume that the son is the only dependent and that they do not itemize.

Form 8863 Education Credits (American Opportunity and Lifetime Learning Credits) Department of the Treasury Internal Revenue Service (99) CAUTION Part I 2011 See separate instructions to find out if you are eligible to take the credits. Attach to Form 1040 or Form 1040A. Attachment Sequence No. 50 Your social security number Name(s) shown on return ! OMB No. 1545-0074 You cannot take both an education credit and the tuition and fees deduction (see Form 8917) for the same student for the same year. American Opportunity Credit Caution: You cannot take the American opportunity credit for more than 4 tax years for the same student. 1 (a) Student's name (as shown on page 1 of your tax return) First name Last name (b) Student's social security number (as shown on page 1 of your tax return) (c) Qualified expenses (see instructions). Do not enter more than $4,000 for each student. (d) Subtract $2,000 from the amount in column (c). If zero or less, enter -0-. (e) Multiply the amount in column (d) by 25% (.25) 2 Tentative American opportunity credit. Add the amounts on line 1, column (f). If you are taking the lifetime learning credit for a different student, go to Part II; otherwise, go to Part III . . . . . . Part II (f) If column (d) is zero, enter the amount from column (c). Otherwise, add $2,000 to the amount in column (e). 2 Lifetime Learning Credit Caution: You cannot take the American opportunity credit and the lifetime learning credit for the same student in the same year. 3 (a) Student's name (as shown on page 1 of your tax return) First name 4 5 6 Last name Add the amounts on line 3, column (c), and enter the total . . . . . Enter the smaller of line 4 or $10,000 . . . . . . . . . . . Tentative lifetime learning credit. Multiply line 5 by 20% (.20). If you Part III; otherwise go to Part IV . . . . . . . . . . . . . . For Paperwork Reduction Act Notice, see your tax return instructions. (b) Student's social security number (as shown on page 1 of your tax return) .......... .......... have an entry on line 2, go to ......... Cat. No. 25379M (c) Qualified expenses (see instructions) 4 5 6 Form 8863 (2011) Page 2 Form 8863 (2011) Part III Refundable American Opportunity Credit 7 8 Enter the amount from line 2 . . . . . . . . . . . . . Enter: $180,000 if married filing jointly; $90,000 if single, head of household, or qualifying widow(er) . . . . . . . . . . 9 Enter the amount from Form 1040, line 38, or Form 1040A, line 22. If you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from Puerto Rico, see Pub. 970 for the amount to enter . . . . . . . . 9 Subtract line 9 from line 8. If zero or less, stop; you cannot take any education credit . . . . . . . . . . . . . . . . . . . . 10 Enter: $20,000 if married filing jointly; $10,000 if single, head of household, or qualifying widow(er) . . . . . . . . . . . . . . . . . 11 If line 10 is: Equal to or more than line 11, enter 1.000 on line 12 . . . . . . . . . 10 11 12 . . . . . . . . . . . . 14 17 18 19 20 21 22 23 } . . . . Multiply line 7 by line 12. Caution: If you were under age 24 at the end of the year and meet the conditions on page 4 of the instructions, you cannot take the refundable American opportunity credit. Skip line 14, enter the amount from line 13 on line 15, and check this box . . Refundable American opportunity credit. Multiply line 13 by 40% (.40). Enter the amount here and on Form 1040, line 66, or Form 1040A, line 43. Then go to line 15 below . . . . . . . . . Part IV 15 16 7 8 Less than line 11, divide line 10 by line 11. Enter the result as a decimal (rounded to at least three places) . . . . . . . . . . . . . . . . . . . . . 13 ..... 12 . 13 14 Nonrefundable Education Credits Subtract line 14 from line 13 ....................... Enter the amount from line 6, if any. If you have no entry on line 6, skip lines 17 through 22, and enter the amount from line 15 on line 6 of the Credit Limit Worksheet (see instructions) . . . . Enter: $122,000 if married filing jointly; $61,000 if single, head of household, or qualifying widow(er) ............. 17 Enter the amount from Form 1040, line 38, or Form 1040A, line 22. If you are filing Form 2555, 2555-EZ, or 4563, or you are excluding income from Puerto Rico, see Pub. 970 for the amount to enter . . . . . . . . 18 Subtract line 18 from line 17. If zero or less, skip lines 20 and 21, and enter zero on line 22 . . . . . . . . . . . . . . . . . . . . 19 Enter: $20,000 if married filing jointly; $10,000 if single, head of household, or qualifying widow(er) . . . . . . . . . . . . . . . . . 20 If line 19 is: Equal to or more than line 20, enter 1.000 on line 21 and go to line 22 Less than line 20, divide line 19 by line 20. Enter the result as a decimal (rounded to at least three places) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Multiply line 16 by line 21. Enter here and on line 1 of the Credit Limit Worksheet (see instructions) Nonrefundable education credits. Enter the amount from line 11 of the Credit Limit Worksheet (see instructions) here and on Form 1040, line 49, or Form 1040A, line 31 . . . . . . . . . 15 16 21 22 23 . Form 8863 (2011) Bernadette, a longtime client of yours, is an architect and the president of the local Rotary chapter. To keep up to date with the latest developments in her profession, she attends continuing education seminars offered by the architecture school at State University. During2012, Bernadette spends $2,000 on course tuition to attend such seminars. She also spends another $400 on architecture books during the year. Bernadette's son is a senior majoring in engineering at the University of the Midwest. During the 2012 calendar year, Bernadette's son incurs the following expenses $8,200 for tuition ($4,100 per semester) and $750 for books and course materials. Bernadette's son, whom she claims as a dependent, lives at home while attending school full-time. Bernadette is married, files a joint return, and has a combined AGI with her husband of $103,000. Prepare 2011 form 8863. Create tax payers last name and social security number. Assume that the son is the only dependent and that they do not itemize