U.S. · Form 8863 line 27
Form 8863 line 27, American opportunity credit expenses.
Adjusted expenses, the $4,000 cap, and how $2,500 results.
Form 8863 line 27 is the student’s adjusted qualified education expenses for the American opportunity credit, and you cannot enter more than $4,000. Adjusted means expenses paid less tax-free educational assistance and refunds. Lines 28 to 30 then work out the credit: $2,000 plus 25% of the next $2,000, so $4,000 of expenses gives $2,500.
Work out line 27
Result
Reference table
| Line | What it is |
|---|---|
| Line 27 | Adjusted qualified education expenses, not more than $4,000. |
| Line 28 | Line 27 minus $2,000; if zero or less, -0-. |
| Line 29 | Line 28 times 25%. |
| Line 30 | If line 28 is zero, line 27; otherwise $2,000 plus line 29. Skip line 31. |
| Line 26 | Felony drug conviction by the end of 2025: stop and go to line 31. |
| Line 31 | The lifetime learning credit alternative; you cannot take both credits for one student in the same year. |
How the adjustment works
The instructions say to reduce expenses paid in 2025 for each student by tax-free educational assistance received in 2025 (allocated to the academic period), by tax-free assistance received in 2026 before you file, and by refunds of expenses received in 2025 or early 2026. The worksheet result is adjusted qualified education expenses, and if it is zero or less you enter -0-.
Scholarship choices
Tax-free educational assistance includes the tax-free part of scholarships and fellowships (including Pell grants), employer educational assistance and veterans’ benefits. The instructions note that the student may choose to include part of a scholarship in income so more expenses remain available for a credit; their example of a $5,000 Pell grant applied to $5,000 of expenses leaves $0 and a credit of $0.
Before line 27
Lines 23 to 26 are screening questions for each student: whether the credit was claimed for any four prior tax years, whether the student was enrolled at least half-time in a degree or credential program, whether the student finished four years of postsecondary education before 2025, and whether the student was convicted of a felony for possession or distribution of a controlled substance. A yes (or no for half-time) sends you to line 31 instead.
Worked example
You paid $5,000 and received $1,000 of tax-free assistance in 2025. Adjusted expenses are $4,000, so line 27 is $4,000, line 28 is $2,000, line 29 is $500 and line 30 is $2,500. Those amounts flow to Part I, line 1, where income phaseouts apply. Figures are illustrative.
Limits of this page
The worksheet is meant to be completed for each academic period; this calculator treats one period at a time. Part I then applies the MAGI phaseout and the 40% refundable split. It does not check whether you qualify.
Sources
- Instructions for Form 8863 (2025): Line-by-line instructions, worksheets and limits. Read November 2, 2026.
- Form 8863 (2025): The form itself, for exact line wording. Read November 2, 2026.
These are the tax year 2025 edition instructions and forms (published for returns filed in 2026). The IRS revises them each year, so thresholds, line numbers and limits can change; check the current edition before relying on a figure.
Frequently asked questions
What is line 27 on Form 8863?
The student’s adjusted qualified education expenses for the American opportunity credit, no more than $4,000.
How do I get adjusted expenses?
Use the worksheet in the instructions: expenses paid less tax-free assistance and refunds.
How much credit does $4,000 produce?
Line 30 is $2,000 plus 25% of the next $2,000, which is $2,500 before income phaseouts.
Can I claim both credits for one student?
No. The form says you cannot take the American opportunity credit and the lifetime learning credit for the same student in the same year.
Which tax year is this?
The 2025 edition of Form 8863 and its instructions.
Not tax or legal advice
This page summarizes IRS instructions and is not tax, legal or financial advice. A CPA, enrolled agent or the IRS can confirm what applies to your situation. Everything runs in your browser; nothing you enter is sent anywhere.