Updated October 21, 2026. Quick answer: The Adjusted Qualified Education Expenses Worksheet in the Form 8863 instructions turns what you paid for a student’s term into the expenses the credits can use. It subtracts tax-free assistance and refunds, and line 4 feeds line 27 (American opportunity credit, capped at $4,000) or line 31 (lifetime learning credit) of Part III.
What this worksheet is for
Part III of Form 8863 asks for each student’s adjusted expenses. For the American opportunity credit the instructions say “Use the Adjusted Qualified Education Expenses Worksheet, later, to figure each student’s adjusted qualified education expenses.” and “Don’t enter more than $4,000.”. For the lifetime learning credit they say “Use the Adjusted Qualified Education Expenses Worksheet next to figure each student’s adjusted qualified education expenses.”
The student pages are covered at Form 8863 lines 27 to 30 and line 31.
The worksheet line by line
| Line | What the worksheet says |
|---|---|
| When to use it | “Complete a separate worksheet for each student for each academic period beginning or treated as beginning (see below) in 2025 for which you paid (or are treated as having paid) qualified education expenses in 2025.” |
| 1 | “Total qualified education expenses paid for or on behalf of the student in 2025 for the academic period” |
| 2a | “Tax-free educational assistance received in 2025 allocable to the academic period” |
| 2b | “Tax-free educational assistance received in 2026 (and before you file your 2025 tax return) allocable to the academic period” |
| 2c | “Refunds of qualified education expenses paid in 2025 if the refund is received in 2025 or in 2026 before you file your 2025 tax return” |
| 3 | “Total adjustments (add lines 2a, 2b, and 2c)” |
| 4 | “Adjusted qualified education expenses. Subtract line 3 from line 1. If zero or less, enter-0-” |
| Early-2026 terms | “If any qualified education expenses for the student were paid in 2025 for an academic period beginning in the first 3 months of 2026, treat that academic period as if it began in 2025.” |
A worked example
Illustration, not an IRS example. Every input is invented.
| Item | Illustration |
|---|---|
| Line 1 (an invented input for the computed example: tuition and required fees paid for the term) | $9,000 |
| Line 2a (tax-free scholarship for the term, invented) | $3,000 |
| Line 2b (none) | $0 |
| Line 2c (a refund received, invented) | $500 |
| Line 3, computed: lines 2a, 2b and 2c added | $3,500 (computed) |
| Line 4, computed: line 1 minus line 3 | $5,500 (computed) |
The $5,500 on line 4 goes on line 27 for the American opportunity credit, but the instructions cap that line at $4,000. Line 31 is for the lifetime learning credit instead. A student cannot have both credits in the same year.
Where the number comes from
Line 1 comes from Form 1098-T and your own records of what you paid, and the tax-free assistance on line 2 includes scholarships. The student sections are covered at Form 8863 lines 20 to 22. Education savings rules that interact with the credit are at 529 plan tax deductions by state.
Where it goes next
Line 4 goes on Part III, line 27 or line 31. For line 27 the instructions add “Enter the total of all amounts from all Parts III, line 30, on Part I, line 1.” For line 31 they add “Enter the total of all amounts from Part III, line 31, on Part II, line 10.” The tax cap that follows is at the Credit Limit Worksheet. On Form 1040 the education credits reach line 20, captioned “Amount from Schedule 3, line 8”.
Edition and line numbers
This page reads the Instructions for Form 8863 (2025), the current file irs.gov served on 2026-10-21 (sha256 in the kit data). The Adjusted Qualified Education Expenses Worksheet in it is for the tax year 2025 return, filed in 2026. Check the tax year printed on the worksheet in your own instructions and use that year’s line numbers, because a different year’s worksheet can number or word its lines differently.
Common mistakes
- Claiming both credits for the same student. The instructions warn “You cannot claim the American opportunity credit and the lifetime learning credit for the same student in the same year.”
- Entering more than the cap on line 27. The instructions say “Don’t enter more than $4,000.”
- Skipping the early-2026 term rule, which says “treat that academic period as if it began in 2025.”
Related: Form 8863, Form 8863 lines 27 to 30, line 31, Form 8863 lines 20 to 22, the Credit Limit Worksheet, and 529 plan tax deductions by state.
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Answer againSources
- Instructions for Form 8863, Education Credits (2025): https://www.irs.gov/pub/irs-pdf/i8863.pdf
- Form 1040 (2025): https://www.irs.gov/pub/irs-pdf/f1040.pdf
Read from the IRS documents linked above on October 21, 2026. General information, not tax advice. Your own facts decide the outcome, and a preparer, the account provider or the IRS is the right place to confirm anything consequential.