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Common questions for Form 8863 in ProSeries

by Intuit Updated 4 months ago

This article contains answers to frequently asked questions regarding the 8863 in individual returns:

For information on generating the 8863 see Education Credit and Expenses Workflow

Calculations and limitations addressed in this article may be impacted by inflation adjustments for the year. To see the IRS annual inflation adjustments for tax year 2021 and 2022 see here.

The Recapture tax from Form 8863 amount can be entered on Line E of the Tax Smart Worksheet found in ProSeries on the 1040 Worksheet.

Calculate and report the recapture amount as follows:

  1. Print the original Form 8863 from the previous year's return.
  2. On the Form 8863 - Education Credits used to calculate the original education credit, reduce the applicable qualified expenses by the amount of the refund or tax-free assistance your client received this year.
  3. Recalculate the original Form 8863 - Education Credits using the reduced expense amount.  Do not change any of the other information on the previous year's return.
  4. Manually compute the difference between the original education credit and the recalculated education credit. This is the recapture amount.
  5. Open the current year of ProSeries.
  6. Open the 1040/1040SR Wks.
  7. Scroll down to the Tax Smart Worksheet on page 3.
  8. Enter the recapture tax from Form 8863 on Line E.

See IRS Publication 970 and  IRS Publication 525 for further information about the recapture of education credits.

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