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Entering amounts in Form 1098-T and generating Form 8863 in ProConnect Tax

SOLVED•by Intuit•121•Updated 1 year ago

This article will assist you with entering information from Form 1098-T. Form 1098-T is informational only. It alerts students that they may be eligible for education credits, but it doesn't contain all of the information needed to claim those credits.

Before you start

  • Box 4 or box 6: If your client's 1098-T reports these adjustments for prior years, review their previous tax returns to determine if they need to file an amendment. These boxes won't affect the current year return.
  • Box 5: Use IRS Pub. 970 to determine if any of the scholarship is taxable.
    • If any of the scholarship is nontaxable, you'll need to reduce the amount of tuition you enter in step 10 by the nontaxable scholarship amount.
    • If any of the scholarship is taxable, go to the SS Benefits, Alimony, Miscellaneous Inc. screen and enter the amount in Taxable scholarships and fellowships. You don't need to reduce the amount of tuition you enter in step 10 by taxable scholarships.

Follow these steps to enter Form 1098-T in an individual return:

  1. Go to the Input Return tab.
  2. From the left of the screen, select Credits and choose Education/Tuition (1098-T, 8863).
  3. Scroll down to the Student Information subsection and enter the required information:
    • If the 1098-T recipient is the taxpayer or spouse on the return, use the 1=taxpayer, 2=spouse field.
      • You don't need to re-enter the student's name or SSN.
    • If the 1098-T recipient is a dependent on the return, use the Dependent number field. The dependent number corresponds to the order in which dependents are entered on the General > Dependents screen.
      • For example, if the student is the second dependent entered, their dependent number is 2. You don't need to re-enter the student's name or SSN.
  4. Scroll down to the American Opportunity Credit (AOC) Disqualifiers section.
  5. Enter the Number of prior years AOC claimed, if any.
  6. Check any boxes in this section that apply.

Force Lifetime Learning Credit (LLC): select this box to force the LLC when the student otherwise qualifies for the AOC.  If all of the following are true, based on the entries (or absence of entries) in this section, the program applies the AOC:

  • The combined number of prior years that the Hope Credit and AOC was claimed is less than 4 years.
  • 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 to a post-secondary degree, certificate, or other recognized post-secondary educational credential
  • The student hadn't completed the first 4 years of post-secondary education before the current year.
  • The student wasn't convicted before the end of the current year of a felony for possession or distribution of a controlled substance.
  1. Scroll down to the Educational Institution Attended subsection and enter the following info from the 1098-T:
    • Name
    • Address
    • City, State, and ZIP code
    • Federal ID number
  2. Mark any applicable checkboxes in this section.
    • 2023 Form 1098-T wasn't received: Check this box to answer "No" to the question on Form 8863, page 2.
    • 2023 Form 1098-T received with Box 7 completed: This box doesn't affect this year's return. When you transfer this client to next year, we'll use this entry to complete next year's 8863 questions correctly.
    • 2022 Form 1098-T received with Box 7 completed: Check this box if the student received Form 1098-T from this institution for 2022 with box 7 checked. You must also provide the institution's Federal ID number from Form 1098-T.
  3. Scroll down to the Current Year Expenses subsection.
  4. Enter the Qualified tuition and fees (net of nontaxable benefits)
    • You may be required to reduce the Qualified tuition and fees (net of nontaxable benefits) amount for nontaxable scholarships reported on the 1098-T, box 5.
    • If the client is claiming other education benefits, don’t enter expenses here that are being used to figure the tax-free portion of the other benefit (for example, ESAs or QTPs).
  5. Enter the Books and supplies required to be purchased from the institution. This field will be used to calculate the credit for the LLC or AOC.
  6. Enter the Books and supplies not entered above (AOC only).
    • Use this field for expenses that qualify for the AOC, but not for the LLC.
  7. Use the Additional Institutions Attended subsection if the same student received multiple Forms 1098-T.
    • For additional students, select the + (plus sign) at the top of your screen to add a new tab.

There's no specific field to enter scholarships received on a Form 1098-T, box 5. However, scholarships may affect the adjusted qualified education expenses eligible for education credits on Form 8863. Refer to IRS Pub. 970 for determining if this adjustment needs to be made for the client's specific tax situation.

To enter an adjustment for the 8863:

  1. Go to the Input Return tab.
  2. On the left-side navigation menu, select Credits.
  3. Click on Education/Tuition (1098-T) (8863).
  4. Scroll down to the Current Year Expenses section.
  5. In the Qualified tuition and fees (net of nontaxable benefits) field, enter the net amount of 1098-T, box 1, and 1098-T, box 5.

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