Form 8863 is used to figure and claim education credits, either the American Opportunity Credit or the Lifetime Learning Credit. These credts are based on adjusted qualified education expenses paid to an eligible postsecondary educational institution and are limited based on Modified Adjusted Gross Income (MAGI).
Eligible institutions are required by the IRS to send Form 1098-T to students by January 31st, however some institutions may not be required to furnish the student with Form 1098-T if the student:
- was a qualified nonresident alien,
- had their qualified education expenses paid entirely with scholarships,
- had their qualified education expenses paid under a formal billing arrangement, or
- was enrolled only in courses for which no academic credit is awarded.
Taxpayers and students should reach out to the institution if they do not receive the form by the due date, however not having received Form 1098-T doesn't disqualify the student from claiming an education credit.
If the student didn't receive Form 1098-T and there is any question regarding whether the school is an eligible institution, refer the US Department of Education lists of eligible institutions linked in the Additional Information below.
The preparer will need to have verifiable documentation of expenses being claimed and of funds received reducing education costs plus scholarships and grants. If the taxpayer has qualified expenses not included on Form 1098-T, the preparer may add them to the total and include them on Form 8863. We suggest including a Preparers' Note in the return with qualified expenses notated.
To enter qualified education expenses into TaxSlayer ProWeb, from the Federal Section of the tax return select:
- Credits Menu
- Education Credits - be sure you have entered all income and adjustments.
- You will be asked if you have completed the Income Section.
- Select the eligible student from the list.
- Answer the four qualifying questions to determine eligibility.
- Answer the two Yes/No Form 1098-T questions. (Note: If you need to return to these questions after having completed the remaining steps, you'll need to delete the educational institution(s) entered.)
- Enter educational institution's name and address.
- Enter the total qualified expenses included and not included on Form 1098-T.
- The tax program will use date to determine best credit based on taxpayer's tax situation. The preparer can use Click Here to enter the manual override screen and choose a different credit, if applicable.
Reminder: Only one type of credit (American Opportunity or Lifetime Learning) can be used by student in a tax year.
Note: This is a guide to entering education expenses into the TaxSlayer ProWeb program. This is not intended as tax advice.