I’m working on our 2018 taxes (we got an extension). I’ve always used the TaxAct program to file, but this year, although we qualify for the American Opportuntiy Credit for our daughter based on the amount of tuition we actually paid during 2018, the numbers on her 1098-T don’t reflect that (and in fact show scholarships being far greater than tuition. Unfortunately, TaxAct does not let you enter the amount actually paid into the system. Once you put in the numbers on the 1098-T, you’re stuck with them.
Do any of the other major tax preparation software programs allow you to just enter in what would effectively be line 27 of Part III of the Form 8863 (“Adjusted Qualified Education Expenses. Don’t enter more than $4000”? I’m trying to avoid doing our taxes by hand this year, but I also don’t want to go through the process of signing up for a program without knowing first whether I’ll have the same problem (and then having to go through that process with a third program etc. etc.).
The 1098 form often does not reflect actual amounts. You should do your own calculations, using the 1098 as a reference. Amounts may reflect more than 1 calendar year, so you may need to review the previous year’s form along your student’s college billing/account info.
Usually, a student will have additional QEE expenses which are not included on the form, such as books, supplies, software licenses, class fees, etc.
Hi, thank you – yes I’m aware that the numbers aren’t correct, and I’m also aware of what numbers I want to use (which is essentially the maximum $4000 amount, as my check – for tuition only, not room and board or insurance or other non-allowable expenses – exceeded that amount.
My problem is that I’ve been using TaxAct for the past several years to do my taxes. TaxAct does this: “Did you get a 1098-T”. Yes. “Enter the numbers”. I do so. It uses those wrong numbers to say that we don’t qualify for the AOC, and doesn’t allow us to override that decision anywhere on the form. I’ve spoken with TaxAct support about this, and they acknowledge that that’s the way it is. I had hoped that there would be somewhere in TaxAct where I could directly access the Form 8863 and override the calculation to say that the amount paid was $4000, but TaxAct says no, they don’t allow that – even though someone filing on paper could easily do so.
I’m not comfortable fudging the 1098-T numbers in Tax Act, because I’m afraid it will create a red flag that the numbers don’t match up. But I also prefer to apply electronically if possible. Thus my question is whether anyone here uses a different tax software packages (TurboTax? H&R BlocK? etc.) that will allow direct access to the form 8863 so that the $4000 figure can be manually put in, even if the 1098-T doesn’t accurately reflect our reality
I was under the impression that you do not use the 1098-T for that line item. It’s what you actually paid in QEE. The 1098-T is for your reference and is often inaccurate. I haven’t had to deal with it yet personally, but here’s a link for how to handle it in Turbo Tax if the amounts are different. Maybe there is something similar in TaxAct?
Use the IRS Free File Fillable Forms. Yes, there’s no “interview” type data entry and you have to understand basic income tax stuff (unless you have a more complicated tax situation, which means you’ll need to have a larger knowledge base), but electronic filing is free and you’ll avoid the annoying TaxAct problem you are describing.
As noted above, the 1098-T forms are for informational purposes and are notoriously innacurate, so it’s unfortunate that TaxAct has you enter the actual 1098-T numbers into their program and then won’t let you adjust the figures as necessary when completing the actual IRS form 8863 (which doesn’t ask for or require numbers to be transposed from the 1098-T).
The way it worked for us when 1098T showed more scholarships received than QEE paid, once the student reported scholarships or grants that were used for room and board, QEE was freed up to claim AOTC.
There should be questions about what amount was used for room and board, that would make the amount taxable income to the student.
I’m pretty sure Turbo Tax let me put in my own numbers after putting in what was on the 1098-T but I was using the ‘freedom’ edition (free)
Using your own numbers (not off the 1098) is going into the TaxAct software but not on the tax form. What should print out on the final tax return is the correct numbers so you aren’t signing an incorrect tax filing. try it and see what prints out before submitting.
@BelknapPoint , we had realized capital gains this year (sale of securities), so we have to do a Schedule D, and I was under the impression that we can’t use the IRS Free File forms, though perhaps I’m mistaken about that.
@mommdc, I’ve followed the instructions on that page, and they still don’t allow you to tell the system to ignore or override the 1098-T. It still comes up and tells me that not only do we not qualify for the credit, but that she owes tax on the excess scholarship amount (the 1098-T included two semesters’ worth of scholarships (Spring & Fall 2018), but just one semester worth of tuition (Fall 2018), since Spring 2018 tuition was included on the 2017 1098-T, and she opted to graduate in December. Technically the numbers are correct, they just don’t reflect our reality, which is that we had qualified expenses of over $5000 in 2018.
None of the scholarship amount was used for room and board. She lived off-campus and paid her expenses out-of-pocket.
@Twoinanddone, thanks – I guess I’ll give Turbotax a try.
I used TaxAct for years and had to abandon it for my 2018 return because of quirks with the new tax law and how my ex and I handle dependents. It was just not going to let me do what I needed to do (and what Turbo Tax had no trouble with).