How do I enter information from Form 1098-T?
 
How do I generate form 8863?

Solution

To enter/report Form 1098-T, follow these steps:

  1. Go to Screen 38.1, Education Credits/Tuition Deduction. (Screen 38 in 2013 and prior years.)
  2. Complete the Student Information:
    1. Enter a 1 or 2 in, 1= taxpayer, 2= spouse; or if the Student is a dependent.
    2. Enter the First name.
    3. Enter the Last name.
    4. Enter the Social security number.
  3. Continue to the American Opportunity Credit (AOC) Disqualifiers section.
  4. Enter the Number of prior years Hope credit claimed.
    • Enter the number of prior years that the Hope Credit was claimed for the student.  If the combined number of prior years that the Hope Credit and American Opportunity Credit is four or more years, the student is disqualified from taking the American Opportunity Credit, and the program applies the Lifetime Learning Credit.
  5. Enter the Number of prior years AOC claimed.
    • Enter the number of prior years that the American Opportunity Credit was claimed for the student.  If the combined number of prior years that the Hope Credit and American Opportunity Credit is four or more years, the student is disqualified from taking the American Opportunity Credit, and the program applies the Lifetime Learning Credit.
  6. Check any of the following boxes, if applicable:
    1. Student was NOT enrolled at least half-time for at least one academic period that began in [current tax year] (or the first 3 months of [next tax year] if the qualified expenses were made in [current tax year] at an eligible institution in a qualified program.
      •  Select the  box (or enter 1) if the student was not enrolled at least half-time for at least one academic period that began in 2015 (or the first 3 months of 2016 if the qualified expenses were paid in 2015) at an eligible educational institution in a program leading towards a post secondary degree, certificate, or other recognized post secondary educational credential.  If you select this box, the student is disqualified from taking the American Opportunity Credit, and the program applies the Lifetime Learning Credit.
    2. Student complete first four years of post-secondary education before [current tax year].
      •  Select the box (or enter 1) if the student completed the first 4 years of post secondary education before the beginning of 'CurrentYear'.  If you select this box, the student is disqualified from taking the American Opportunity Credit, and the program applies the Lifetime Learning Credit.
    3. Student was convicted, before the end of [current tax year], of a felony for possession or distribution of a controlled substance.
      • Select the box (or enter 1) if the student was convicted, before the end of 2015, of a felony for possession or distribution of a controlled substance.  If you select this box, the student is disqualified from taking the American Opportunity Credit, and the program applies the Lifetime Learning Credit.
    4. Force Lifetime Learning Credit (LLC).
      • See additional note below*.
  7. Continue to the Educational Institution Attended section
  8. Enter the Name.
  9. Enter the Street address.
  10. Enter the City/ State/ ZIP code; or,
  11. Enter the Region/ Postal Code/ Country (if foreign).
  12. Check any of the following boxes, if applicable:
    1. [Current tax year] Form 1098-T was not received.
      • Select the box (or enter 1) if the student did not receive Form 1098-T from this institution for 2015 to answer "No" to the question on Form 8863, page 2.  If a Form 1098-T was received, you must provide the institution's federal identification number (from Form 1098-T).
    2. [Current tax year] Form 1098-T received with Box 2 and 7 completed.
      • Select the box (or enter 1) if the student received Form 1098-T from this institution for 2015 with Box 2 filled in and Box 7 checked.  This check box is used for proforma purposes only so that the question regarding receipt of a prior year 1098-T with box 2 filled in and Box 7 checked will be answered accordingly on next year's Form 8863.
    3. [Prior tax year] Form 1098-T received with Box 2 and 7 completed.
      • Select the box (or enter 1) if the student received Form 1098-T from this institution for 2014 with Box 2 filled in and Box 7 checked. If this box is selected, you must also provide the institution's federal identification number (from Form 1098-T).
  13. Enter the Federal ID number from Form 1098-T.
  14. Continue to the Current Year Expenses section.
  15. Enter the Qualified tuition and fees (net of nontaxable benefits).
    • The definition of qualified expenses for the American Opportunity credit, Lifetime Learning credit, and Tuition and Fees deduction varies.  When entering current year expenses in these input fields, if the taxpayer is claiming other education benefits, do not enter expenses here that are being used to figure the tax-free portion of the other benefit (ESAs or QTPs for example).
    • In general, qualified tuition and fees are those amounts required for enrollment or attendance at an eligible educational institution.  It does not matter whether the expenses were paid in cash, by check, by credit card, or with borrowed funds.  
    • Qualified expenses for the American Opportunity credit, Lifetime Learning credit, and tuition and fees deduction vary.  The following rules will be applied to current year expense entries:
    • Qualified Tuition and Fees (net of nontaxable benefits) - an entry in this field will be used to calculate the credit or deduction on any one of the benefits being claimed.
  16. Enter the Books and supplies required to be purchased from the institution.
    • Books and Supplies Required to be Purchased from the Institution - an entry in this field will be used to calculate the credit or deduction on any one of the benefits being claimed.
  17. Enter the Books and supplies not entered above (AOC only).
    • Books and Supplies Not Entered Above (AOC only) - an entry in this field will be used to calculate the American Opportunity credit only.  Entries in this field will not be included in the calculation of the Lifetime Learning credit, or Tuition and Fees deduction.​

Other Helpful Information:

  • To report taxable scholarships (as defined in Publication 970), enter the amount on Screen 14.1, Miscellaneous Income under  Taxable scholarships and fellowships.
  • Lacerte does not have input for Box 6: Adjustments to Scholarships or Grants for a Prior Year, or Box 7: Checkbox for Amounts for an Academic Period Beginning in January through March of 20XX. Refer to the Form 1098-T instructions for more information.

Note: The Tuition and Fees Deduction expired at the end of 2013 so Lacerte will not optimize between the Tuition and Fees Deduction and the Education Credits unless Congress extends the Tuition and Fees Deduction. See Tax Year 2014 Extender Legislation for more information. In 2013 and prior years, based on the entries made, Lacerte will optimize between the Education Credits or the Tuition and Fees Deduction.

*Additional Note - Force Lifetime Learning Credit (LLC): Select the box (or enter 1) to force the Lifetime Learning Credit when the student otherwise qualifies for the American Opportunity Credit.  A student qualifies for the American Opportunity Credit when:

  1. The combined number of prior years that the Hope Credit and American Opportunity Credit was claimed for the student is less than 4 years, and
  2. The student was enrolled at least half-time for at least one academic period that began in the current year (or the first 3 months of the next year if the qualified expenses were paid in the current year) at an eligible educational institution in a program leading towards a post-secondary degree, certificate, or other recognized post-secondary educational credential, and
  3. The student had not completed the first 4 years of post-secondary education before the current year, and
  4. The student was not convicted, before the end of the current year, of a felony for possession or distribution of a controlled substance.

If all of the above are true based on the entries (or absence of entries) in the "AOC Disqualifiers" input section, the program applies the American Opportunity Credit.  Selecting this box (or entering 1) forces the application of the Lifetime Learning Credit for the student. 

AOC Credit: The American Opportunity credit is up to $2,500 for qualified tuition and related expenses paid for each eligible student.  

LLC: The lifetime learning credit is 20% of qualified expenses, up to $2,000 per return and not subject to the American Opportunity credit qualifications. This credit, based on the tuition and expenses of a student, may be claimed regardless of the amount of post-secondary education the student has completed and for an unlimited number of years for the same student. To claim the lifetime learning credit, the student does not need to be pursuing a degree or other recognized educational credential. The credit is available for one or more courses and the felony drug conviction rule does not apply.