How to Fill Out the Education Tax Forms
1098-T and Education Expenses
Think of our 1098-T and Education Expenses screen as one-stop-shopping for most education credits and deductions. You’ll find the American Opportunity credit, the Lifetime Learning credit, and the tuition and fees deduction all on this one form. For each student, though, you have to choose just one of the three. (We cover the choices more thoroughly in Tuition Deduction vs. Education Credit.)
If you accidentally choose more than one credit, we’ll use the one that helps you the most.
Now let’s walk through how to fill out this form.
Education tax breaks are student-specific, so at the top of the screen, you’ll need to select the appropriate student. If the student is not available in the list, that means the student has not yet been added as a dependent on your return. So for a child, you need to first fill out the Dependent screen.
Next are one or more questions that determine whether you can claim the American Opportunity Credit or the Lifetime Learning Credit. Additional questions may appear, depending on your answers. Read these carefully, and if you need help along the way, check the Help box on the right side of the screen.
Filling in Amounts
This section is straightforward. Just provide information from your school, which you can find on a Form 1098-T from the school.
You should provide information for each school the student attended. If the student attended three separate colleges during the year (and claimed expenses from all of them), you’ll need to fill out a screen section for all three. If you need to add another college, click the link, “Add another educational institution.”
Near the bottom of the screen is a field where you can adjust your to modified adjusted gross income (MAGI). This could be needed if you’re also reporting Foreign Earned Income using the Form 2555-series or on Form 4563. Check the Help text on the right side of the page for complete instructions.
There are also a few checkboxes some taxpayers may find useful. One is to denote that the taxpayer is the dependent of another, but that person is not claiming either the exemption or the education credit. If that applies to you, checking this box could let you still claim a credit, provided you qualify otherwise.
Next is a checkbox that makes the American Opportunity Credit non-refundable on your return. This comes into play for upper-income taxpayers who want the credit, but don’t want complications from the alternative minimum tax (AMT).
The last checkbox on the form denotes that all the expenses entered are for an undergraduate degree only. This is necessary on some state returns, but is not needed on federal tax returns.
What About Student Loan Interest?
That goes on line 33 of our Form 1040 – Adjustments Section screen. Don’t worry, our tax return interview will help you fill out the right screens.