Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits) is used to calculate and the education credits based on the adjusted qualified education expenses paid to an eligible postsecondary educational institution. Since these credits are limited based on Modified Adjusted Gross Income (MAGI), Form 8863 will also verify the MAGI limitations.
Most educational institutions are required by the IRS to send Form 1098-T, Tuition Statement to students by January 31. A taxpayer filing a return before receiving the form will need to be certain of both their eligibility and the amounts that will be on the form, and at some point after January 31 should reach out to the institution if they have not received the form.
A student attending an institution that isn't required to furnish Form 1098-T will likewise need to be certain of their eligibility for the credit they are claiming and be able to substantiate their expenses.
The preparer will need to have verifiable documentation of expenses being claimed, funds received reducing education costs, and scholarships and grants. If there are qualified expenses not included on Form 1098-T, the preparer may include them on Form 8863 and also include a preparer note in the return notating the additional expenses. The taxpayer will need to provide the preparer with copies of receipts or other proof of the expenses.
To enter information to claim an educational credit in TaxSlayer Pro, from the Main Menu of the tax return (Form 1040) select:
- Education Credits
- Edit Qualifying Students Information
- Select the qualifying student
- Indicate whether or not Form 1098-T was received
- Enter the institution's EIN, name, and address (required irrespective of whether or not Form 1098-T was received).
- Evaluate the two check boxes regarding the Form 1098-T
- Select the education credit being claimed
- Select Qualified Expenses and enter the amounts for expenses as well as for scholarships, grants, and any other educational assistance received.
- Answer the four Yes/No questions.
- Only one type of credit can be claimed per student per year.
- The Tuition and Fees Deduction (Form 8917) cannot be claimed along with a credit on Form 8863.
This is a guide on entering information for the education credits into the TaxSlayer Pro program. This is not intended as tax advice.