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

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 Income > Taxable scholarships and fellowships.
• For information on entering scholarships, see How to enter Form 1098-T box 5 - scholarships in Lacerte.

Follow these steps to complete Form 1098-T:

1. Go to Screen 38.1, Education Credits.
2. Complete the Student Information section.
3. Complete the American Opportunity Credit (AOC) Disqualifiers section, if applicable.
4. Check any of the remaining boxes in this section, if applicable.
5. Scroll down and complete the Educational Institution Attended section:
   • Complete the filer’s information.
   • Enter the Federal ID number from Form 1098-T.
   • 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.
6. Scroll down and complete the Current Year Expenses section:
   • 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).
   • 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.
   • Enter the Books and supplies not entered above (AOC only).

For tax year 2021:

• Tuition and Fees Deduction (Form 8917) has been repealed starting in Tax Year 2021.
• American Opportunity Credit & Lifetime Learning Credit (Form 8863) changes:
  • 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

For tax year 2020:

• 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.