Desktop: Education Credits - Form 8863

Form 8863 can be used to claim Education Credits. These Credits include the American Opportunity Credit and the Lifetime Learning Credit which are both limited by Modified Adjusted Gross Income (MAGI) and are the basis of adjusted qualified education expenses paid to a secondary institution that is educationally eligible.

The IRS requires eligible institutions to send Form 1098-T to students before the end of January. Some institutions however, do not need to send the Form to students if the student: 

• Was a nonresident alien that was qualified 
• Had all their qualified education expenses paid through scholarship 
• Had their qualified  education expenses paid for under a formal billing arrangement 
• Enrolled into courses that never had awards for academic credit 

If the students or taxpayers do not receive the form  by the deadline date, they should reach out to the institution. The students are however not disqualified from claiming education credit because they lack Form 1098-T. 

In the event that the student doesn’t receive Form 1098-T and there is doubt as to whether the school falls under the category of eligible institutions, kindly refer to the US Department of Education List.

It is mandatory that the preparer has documents that can be verified showing the expenses that are being claimed as well as funds received hence reducing the cost of education together with grants and scholarships. Qualified Expenses that have not been included on Form 1098-T can be added to the total then included on Form 8863. In such a case, it will be necessary to add a Preparer’s Note. 

To complete Form 8863 in the Taxx Savage Pro: 

• Go to the Main Menu of the tax return (Form 1040) 
• From the menu, select Credits 
• Proceed to Education Credits 
• Then Edit Qualifying Students Information 
• Click New 
• Select the qualifying student 
• Show whether Form 1098-T was received 
• Enter the EIN, name, and address of the institution (required, regardless of whether Form 1098-T was received). 
• Assess the checkboxes relating to Form 1098-T 
• Select the education credit that is being claimed 
• Select Qualified Expenses then enter the amounts for expenses and those for grants, scholarships as well as any other educational help received. 
• Give responses to the four Yes/No questions. 

Caveats: 

• A student can only claim only one type of credit. 
• Tuition and Fees Deduction (Form 8917) cannot be claimed together with a Form 8863 credit. 

Additional Information:

IRS: Instructions for Form 8863

IRS: Publication 970, Tax Benefits for Education