Where do I enter education credits and deductions for taxpayers and dependents in Drake Tax?
Screens 8917 (on the Adjustments tab) and 8863 (on the second Credits tab) are the same combined data entry screen.
The tuition and fees deduction and the education credits (Lifetime Learning and American Opportunity Credits) can be taken only for a dependent, taxpayer, or spouse. There are limitations for each of these credits/deductions, see Related Links for details.
- Enter Tuition and Fees Expenses on the 8863/8917 screen; tuition and fees deductions appear on Form 8917 in view.
- Enter Lifetime Learning and American Opportunity credits on the 8863/8917 screen; education credits appear on Form 8863 in view.
- Note: Neither form is produced if the taxpayer does not qualify for the benefit.
On the combined 8863/8917 screen, begin by choosing the student’s SSN from the drop list under Student’s SSN; if the student's name is not showing in the list, ensure that you have entered them in on Screen 2 - Dependents. Once entered, if a dependent who is over 18 does not show on the list, check data entry for that dependent to be sure Over 18 and a student has been selected. You may need to recalculate the return to have the SSN appear in the drop list.
A separate 8863/8917 screen is needed for each student for whom a credit is claimed. Starting in Drake16, multiple schools attended by the same student can be entered on the 8863/8917 screen by using the Educational Institutions tab located at the top of the screen. The data entry screen has also been revised to be more useful for all three education benefits. Enter in applicable expenses and education assistance amounts in the lines below question 26 on the screen. Then, check the education benefit being claimed to have the software calculate the credit amount for the student. These check-boxes are mutually exclusive since no two credits can be claimed for the same individual in the same year:
Note about Qualified Education Expenses:
Per the 8863 Instructions, each credit only allows certain expenses to be included for the credit calculation. You can enter the amounts as applicable on the 8863 screen and Drake Tax will only carry the allowable amount to the form. This is why there are separate lines for expenses required to be paid (red) and additional expenses not required to be paid (blue) to the educational institution:
- American opportunity credit: Qualified education expenses include amounts paid for tuition, fees, and course materials, which include books, supplies, and equipment needed for a course of study, whether or not the materials are purchased from the educational institution as a condition of enrollment or attendance.
- Lifetime learning credit: Qualified education expenses include amounts paid for books, supplies, and equipment only if required to be paid to the institution as a condition of enrollment or attendance.
- The credit will only be based on the amounts required to be paid (red box above).
- Tuition and Fees deduction: Qualified education expenses include amounts paid in the current year for tuition and fees required for the student’s enrollment or attendance at an eligible educational institution. Required fees include amounts for books, supplies, and equipment used in a course of study if required to be paid to the institution as a condition of enrollment or attendance..
- The deduction will only be based on the amounts required to be paid (red box above).
In Drake 15 and prior,
- Details for two schools can be entered on the first 8863 screen for each student Press Page Down to enter additional information for 3 or more schools on subsequent screens.
- Complete the Adjusted Qualified Education Expenses Worksheet in the Instructions for Form 8863 to determine what amount to enter on line 27 for the American Opportunity Credit or line 31 for the Lifetime Learning Credit.
- See the field help (F1) for lines 27 and 31 for additional information regarding which qualified expenses should be entered here.
- A taxpayer cannot claim both a credit and a deduction for the same student in the same year. An entry in the field Enter current-year qualifying expenses to force the tuition and fees deduction forces the deduction even if credit information is entered.
- See the Help screen for this field (press F1).
- Question 22 parts (2) and (3) are the 1098-T lines under the information about the educational institution. These questions are located below the educational institution name and address sections.