If you claimed the American Opportunity Credit or Lifetime Learning Credit on your federal return, you may also qualify for the Kentucky Education Tuition Tax Credit (Form 8863-K).
Kentucky allows a nonrefundable credit equal to 25% of your allowable federal education credit for qualifying undergraduate education expenses paid to an eligible Kentucky educational institution. Any unused credit may be carried forward for up to five years.
Before You Start
To qualify for this credit:
- You must have claimed either the American Opportunity Credit or Lifetime Learning Credit on your federal return.
- The educational institution must be located in Kentucky.
- The expenses must be for undergraduate education.
- If you claimed a federal education credit instead of the tuition and fees deduction, you must make the same election on your Kentucky return.
- Married taxpayers must file jointly or separately on a combined Kentucky return to qualify.
Where Do I Enter This in the Program?
Kentucky Return > Credits > Education Tuition Tax Credit (Form 8863-K)
Step 1: Confirm the School Is Located in Kentucky
When asked:
Are the Education Expenses from a Kentucky Institution?
Select:
- Yes if the student attended an eligible college, university, vocational school, or other postsecondary institution located in Kentucky.
- No if the school is located outside Kentucky.
Only expenses paid to eligible Kentucky institutions qualify for this credit.
Step 2: Confirm the Expenses Are for Undergraduate Education
When asked:
Are the expenses for undergraduate education?
Select:
- Yes if the expenses were for undergraduate studies.
- No if the expenses were for graduate-level coursework.
Kentucky does not allow this credit for graduate-level education expenses.
Step 3: Add Student Information
Select Add Entry, then Edit.
For each qualifying student, enter:
- Student's Social Security Number (SSN)
- School name
- School address
The program uses information from your federal Form 8863 and the student information entered here to prepare Kentucky Form 8863-K.
If more than one student qualifies, repeat these steps for each student.
What Credit Can I Receive?
American Opportunity Credit
Kentucky allows a credit equal to 25% of the federal American Opportunity Credit.
The maximum Kentucky credit is generally $625 per qualifying student.
Lifetime Learning Credit
Kentucky allows a credit equal to 25% of the federal Lifetime Learning Credit.
The maximum Kentucky credit is generally $500 per return.
The program calculates the credit automatically based on the information from your federal return.
Credit Carryforwards From Prior Years
If you couldn't use the entire Kentucky Education Tuition Tax Credit in a previous year, you may be able to carry the unused portion forward for up to five years.
Enter any available carryforward amounts from:
- 2020
- 2021
- 2022
- 2023
- 2024
You can find these amounts on prior-year Kentucky returns or Kentucky Form 8863-K.
Before Entering a Carryforward
Make sure:
- Kentucky Form 8863-K was completed for the year the credit was originally earned.
- The credit was not fully used in a prior year.
- The carryforward period has not expired.
What Happens Next?
After you enter the required information, the program will:
- Calculate your Kentucky Education Tuition Tax Credit.
- Complete Kentucky Form 8863-K.
- Apply any available carryforward credits.
- Transfer the allowable credit to your Kentucky return.
Important
- Only expenses paid to eligible Kentucky educational institutions qualify.
- The credit applies only to undergraduate education expenses.
- You must claim the same education credit for Kentucky that you claimed on your federal return.
- Keep copies of Forms 1098-T, 8863, 8863-K, and any supporting documentation with your tax records.
- Unused credits may be carried forward for up to five years.
Key Takeaway
If you claimed the American Opportunity Credit or Lifetime Learning Credit on your federal return and the student attended an eligible Kentucky school, complete the Education Tuition Tax Credit section to determine whether you qualify for Kentucky's Form 8863-K credit. The program will calculate the allowable credit automatically.