Education Expenses; Taxpayer & Spouse

Married Filing Separate can not take either Educational Tax Credit or the Tuition & Fees Deduction.

This credit is partially refundable, and has a four year limit. Both the Hope Credit and American Opportunity Credit are included in this four year limit. Reported on Form 8863.

To claim the full credit, your MAGI, modified adjusted gross income must be $80,000 or less for filing status Single, Head of Household, or Qualified Widower. ($160,000 or less for married filing jointly).

• You receive a reduced amount of the credit if your MAGI is over $80,000 but less than $90,000 for filing status Single, Head of Household, or Qualified Widower. (over $160,000 but less than $180,000 for Married Filing Jointly).

• The credit is reduced to $0 when your MAGI is $90,000 for filing status Single, Head of Household, or Qualified Widower ($180,000 for Married Filing Jointly).

This Credit is nonrefundable, and there is no limit to the how many times it can be taken.

• To claim the full credit, your MAGI, modified adjusted gross income must be $65,000 or less for filing status Single, Head of Household, or Qualified Widower (or $130,000 or less for Married Filing Jointly).

• You receive a reduced amount of the credit when your MAGI is between $55,000 and $65,000 for filing status Single, Head of Household, or Qualified Widower (between $111,000 but less than $130,000 for Married Filing Jointly).

• The credit is reduced to $0 when you MAGI is over $65,000 for filing status Single, Head of Household, or Qualified Widower (over $130,000 for Married Filing Jointly).

The tuition and fees deduction can reduce the amount of your income subject to tax by up to $4,000.

• This deduction is claimed as an adjustment to income on Form 1040.

• The maximum amount of Education Expenses claimed (per student) is $10,000.

The information entered into the Education Expenses page is used to calculate a qualifying Education Tax Credit or the Tuition and Fees Deduction.

Returns that are Married Filing Joint will include the following for both the Taxpayer and the Spouse. (Spouse not shown).

Required Education Expenses Paid to Educational Institution:

Enter here the amount from either Box 1 or Box 2 of Form 1098-T, Tuition and Fees Statement.

Other Needed Course Related Materials:

Enter here any other qualified education expenses (i.e. Books, Supplies, etc).

Tax-Free Assistance Received in prior year (current tax year):

Box 5 of Form 1098-T Tuition Statement. Enter in the first box any Grants, Scholarships, and other tax-free educational assistance received.

Tax-Free Assistance Received the current year (not current tax year):

Box 7 is checked of Form 1098-T Tuition Statement. Enter in the middle box any tax-free educational assistance that belongs to the Spring Semester.

IMPORTANT:

Box 7: This is checked when Box 1 and Box 2 include amounts for the Spring Semester.

DO NOT include any educational assistance for the current year Summer Semester or Current Year Fall Semester.

Refunds Paid in prior year (current tax year):

Enter in the third box any refunds received for qualified education expenses paid. Generally, these are refunds to an amount shown in Box 1 or Box 2 of the Form 1098-T Tuition Statement.

Use this box for prior year refund amounts, and Spring Semester refund amounts.

The Credit/Deduction is calculated using any remaining expense amount after adjustments.

Select the applicable answer if a Form 1098-T Tuition Statement was received.

IMPORTANT

• The system will not include Form 1098-T information entered unless this question is answered "Yes". This will prevent the American Opportunity Credit from being on a qualifying return.

• You must include the Education Institution ID Number from Form 1098-T. Failure to do this will prevent the American Opportunity Credit from being taken on a qualifying return.
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Hope or American Opportunity Credit Already Used:

Yes - A Hope or American Opportunity Credit has already been taken in any four years prior.

This credit can only be taken a maximum of 4 times, it does not matter if the credits were taken in consecutive years or not.

No - A Hope or American Opportunity Credit has not been taken a total of 4 times. (3 years and less qualify).

First 4 Years of School Finished: (i.e. Community College or Equivalent)

Yes - Completed the first 4 Years of Post-Secondary Education before the current tax year. (Generally, when attending a University, the first 4 years are completed)

No - Have not completed the first 4 years of Post-Secondary Education.

How should the system treat these expenses? Form 1040 will reflect the selection to this question.

When "Let the system decide" is selected, the system will calculate all options and the return will have the one that is the larger amount.

Caution

Let the system decide does not reflect the difference the amounts have to Form 1040. The amount is solely based on the Education Expenses, and gives you the larger of Tax Credit or Tuition and Fee Deduction.

You can change this by either selecting "Adjustment" or "Tax Credit" and the system will compute the applicable choice only.

Elect Lifetime Credit:

Check this box when a return qualifies for both the American Opportunity Credit and Lifetime Credit, and you would like to to take the non-refundable Lifetime Credit.