The American Opportunity Credit and the Lifetime Learning Credit are available to provide tax relief to taxpayers either seeking higher learning opportunities for themselves or their dependents. For detailed information and a comparison of the credits, refer to the IRS instructions for Form 8863.
In order to receive credit, Form 8863, Education Credits must be completed with the tax return. Students generally receive Form 1098-T from their learning institution which is instrumental in completing Form 8863. If the student does not receive Form 1098-T they will need to provide the tax preparer with verifiable documentation of expenses being claimed and of any funds received reducing education costs.
Form 8863 is used to figure and claim the taxpayer's education credits, which are based on 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.
To complete Form 8863 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.
Note: This is a guide to entering education expenses into the TaxSlayer Pro program. This is not intended as tax advice.