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from Puerto Rico, add to the amount on your Form 1040 or 1040-SR, line 11, the amount of income you excluded. For details, see Pub. 970. American Opportunity Credit Don't claim the American opportunity credit for 2 years after there was a final determination that your claim was due to reckless or intentional disregard of the rules, or 10 years after there was a final determination that your claim was due to fraud. You may be able to claim a credit of up to $2,500 for adjusted qualified education expenses (defined later) paid for each student who qualifies for the American opportunity credit. This credit equals 100% of the first $2,000 and 25% of the next $2,000 of adjusted qualified education expenses paid for each eligible student. The amount of your credit for 2021 is gradually reduced (phased out) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). You cannot claim a credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return). If you can choose between using a student's adjusted qualified education expenses for the American opportunity credit or the lifetime learning credit, the American opportunity credit will always be greater than the lifetime learning credit. Student qualifications. Generally, you can claim the American opportunity credit for a student on a 2021 tax return only if all of the following seven requirements are met. 1. As of the beginning of 2021, the student had not completed the first 4 years of postsecondary education (generally, the freshman through senior years of college), as determined by the eligible educational institution. For this purpose, don't include academic credit awarded solely because of the student's performance on proficiency examinations. 2. The American opportunity credit has been claimed (by you or anyone else) for this student for any 4 tax years before 2021. If the American opportunity credit has been claimed for this student for any 3 or fewer tax years before 2021, this requirement is met. Example 1. Sharon was eligible for the American opportunity credit for 2015, 2016, 2017, and 2020. Her parents claimed the American opportunity credit for Sharon on their 2015, 2016, and 2017 tax returns. Sharon claimed the American opportunity credit on her 2020 tax return. The American opportunity credit has been claimed for Sharon for 4 tax years before 2021. Therefore, the American opportunity credit cannot be claimed for Sharon for 2021. If Sharon were to file Form 8863 for 2021, she would check “Yes” for Part III, line 23, and would be eligible to claim only the lifetime learning credit if she meets all other requirements. Example 2. Wilbert was eligible for the American opportunity credit for 2017, 2018, 2019, and 2021. His parents claimed the American opportunity credit for Wilbert on their tax returns for 2017, 2018, and 2019. No one claimed an American opportunity credit for Wilbert for any other tax year. The American opportunity credit has been claimed for Wilbert for only 3 tax years before 2021. Therefore, Wilbert meets the second requirement to be eligible for the American opportunity credit. If Wilbert were to file Form 8863 for 2021, he would check “No” for Part III, line 23. If Wilbert meets all of the other requirements, he is eligible for the American opportunity credit. 3. For at least one academic period beginning or treated as beginning (see next) in 2021, the student both: a. Was enrolled in a program that leads to a degree, certificate, or other recognized educational credential; and CAUTION ! TIP b. Carried at least one-half the normal full-time workload for his or her course of study. The standard for what is half of the normal full-time workload is determined by each eligible educational institution. However, the standard may not be lower than any of those established by the U.S. Department of Education under the Higher Education Act of 1965. For 2021, you must treat an academic period beginning in the first 3 months of 2022 as if it began in 2021 if qualified education expenses for the student were paid in 2021 for that academic period. See Prepaid Expenses, later. Example. Glenda enrolls on a full-time basis in a degree program for the 2022 spring semester, which begins in January 2022. Glenda pays her tuition for the 2022 spring semester in December 2021. Because the tuition Glenda paid in 2021 relates to an academic period that begins in the first 3 months of 2022, her eligibility to claim an American opportunity credit in 2021 is determined as if the 2022 spring semester began in 2021. Therefore, Glenda satisfies this third requirement. 4. As of the end of 2021, the student had not been convicted of a federal or state felony for possessing or distributing a controlled substance. 5. Filers and students must have been issued a TIN by the due date of their 2021 return (including extensions). 6. The student received Form 1098-T from the educational institution for 2021 or you followed the procedures under Form 1098-T requirement, earlier. 7. You must provide the educational institution's employer identification number (EIN) on your Form 8863. If the requirements above aren't met for any student, you cannot claim the American opportunity credit for that student. You may be able to claim the lifetime learning credit for part or all of that student's qualified education expenses instead, if certain requirements are met. Lifetime Learning Credit The lifetime learning credit equals 20% of adjusted qualified education expenses (defined later), up to a maximum of $10,000 of adjusted qualified education expenses per return. Therefore, the maximum lifetime learning credit you can claim on your return for the year is $2,000, regardless of the number of students for whom you paid qualified education expenses. The amount of your credit for 2021 is gradually reduced (phased out) if your MAGI is between $80,000 and $90,000 ($160,000 and $180,000 if you file a joint return). You cannot claim a credit if your MAGI is $90,000 or more ($180,000 or more if you file a joint return). You cannot claim the lifetime learning credit for any student if you claim the American opportunity credit for that student for the same tax year. Qualified Education Expenses Generally, qualified education expenses are amounts paid in 2021 for tuition and fees required for the student's enrollment or attendance at an eligible educational institution. It doesn't matter whether the expenses were paid in cash, by check, by credit or debit card, or with borrowed funds. For course-related books, supplies, and equipment, only certain expenses qualify. • American opportunity credit: Qualified education expenses include amounts paid for tuition, fees, and course materials, which include books, supplies, and equipment needed for a course of study, whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance. TIP Instructions for Form 8863 (2021) -3-