How Can I Enter Form 8863 - Education Credits in ProWeb?
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
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 enter qualified education expenses into the ProWeb:
- Go to the Federal Section of a tax return
- Proceed to Deductions
- Then to the Credits Menu
- Select Education Credits - ensure that all income and adjustments are entered
- A question will be presented to you on whether you have completed the Income Section. From the list, locate then select the eligible student
- Ensure you provide responses to the four questions used to determine eligibility.
- Provide answers to the two Form 1098-T Yes/No questions. Beware that you will be required to delete the entered educational institution(s) if you leave this part and later come back to fill it.
- Enter the name and address of the institution.
- Enter the total qualified expenses that have been included on Form 1098-T and those that have not been included.
- Based on the tax situation of the taxpayer, the program will determine the best credit. The Click Here option can be used to go to the manual override screen from where a different credit can be chosen if applicable.
Reminder: A student cannot select more than one type of credit to use in a tax year. It is either the American Opportunity or Lifetime Learning.
Note: This is not tax advice. It is a guide on how to enter education expenses into the Taxx Savage ProWeb program.
Additional Information:
About Form 8863, Education Credits (American Opportunity and Lifetime Learning Credits)
US Dept of Education: Database of Accredited Postsecondary Institutions and Programs
US Dept of Education: International Schools That Participate in the Federal Student Loan Programs