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Entering amounts in Form 1098-T and generating Form 8863 in Lacerte

SOLVEDby IntuitLacerte Tax187Updated February 10, 2022

Tuition and Fees Deduction (Form 8917) has been repealed starting in Tax Year 2021.

American Opportunity Credit & Lifetime Learning Credit (Form 8863)

  • Expanded Lifetime Learning Credit to phase outs that mirror American Opportunity Credit in 2021
  • MAGI phase out range --$160,000 --$180,000 married filing joint; $80,000 --$90,000 other filers

Before you start

  • Lacerte doesn’t have input fields for Form 1098-T 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.
  • Taxable scholarships (as defined in IRS Pub. 970), should be entered on Screen 14.1, SS Benefits, Alimony, Miscellaneous Inc. > Alimony and Other IncomeTaxable scholarships and fellowships.

To complete Form 1098-T follow these steps:

  1. Go to Screen 38.1, Education Credits and complete the Student Information section.
  2. Continue to American Opportunity Credit (AOC) Disqualifiers.
    1. Enter the Number of prior years Hope credit claimed.
    2. Enter the Number of prior years AOC claimed.
      • If the combined number of prior years that the Hope Credit and AOC was claimed is 4+ years, the student is disqualified from the AOC, and the program applies the LLC.
    3. Check any of the remaining boxes if applicable; any of these boxes selected will disqualify the student from taking the AOC, and the program will apply the LLC.
    4. 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.
  3. Go to the Educational Institution Attended section.
    1. Complete the filer’s information.
    2. Enter the Federal ID number from Form 1098-T.
    3. Check any of the remaining boxes if applicable:
      • 20XX Form 1098-T wasn't received: select this box if the student didn’t receive Form 1098-T from this institution for 20XX 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 ID number from Form 1098-T.
      • 20XX Form 1098-T received with Box 7 completed: this box is used for proforma purposes only, so the question regarding receipt of a prior year 1098-T with box 7 checked will be answered accordingly on next year's Form 8863.
      • [Prior tax year] Form 1098-T received with Box 7 completed: select this box if the student received Form 1098-T from this institution for 20XX with Box 7 checked. If this box is selected, you must also provide the institution's Federal ID number from Form 1098-T.
  4. Continue to the Current Year Expenses section.
    1. Enter the Qualified tuition and fees (net of nontaxable benefits).
      • These are amounts required for enrollment or attendance at an eligible educational institution, and will be used to calculate the credit or deduction on any one of the benefits being claimed.
      • If the taxpayer 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).
      • Qualified expenses for the AOC, LLC, and Tuition and Fees deduction vary.
    2. Enter the Books and supplies required to be purchased from the institution; this field will be used to calculate the credit or deduction on any of the benefits claimed.
    3. Enter the Books and supplies not entered above (AOC only); this field will be used to calculate the AOC only and won't be included in calculating the LLC or Tuition and Fees deduction.

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

The Lifetime Learning Credit (LLC) is 20% of qualified expenses, up to $2,000 per return and not subject to the AOC 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 LLC, the student doesn’t 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 doesn’t apply.

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