Use the + icon to add Form 8863 Page 2 to the return.
Enter the student’s name and SSN here. Note: The student must be the taxpayer, spouse, or a dependent listed on the return for the taxpayer to qualify for the credit.
Next, enter the Educational Institution’s information exactly as it appears on the 1098-T form.
Answer Question 2:
Did the student receive this form for the current tax year?
* If yes, select Yes.
* If no, select No.
Answer Question 3:
Did the student receive a 1098-T for the previous year with Box 7 checked?
* If yes, select Yes.
* If no, select No.
Enter the institution’s EIN exactly as it appears on the 1098-T.
If the student received multiple 1098-Ts from different institutions, there is a second section to enter additional institution information.
For each additional 1098-T, enter:
* The Educational Institution’s Name
* The Institution’s EIN (as listed on the 1098-T)
* Answer Yes or No to Question 3 (if Box 7 was checked on the prior year’s form)
Next, you will answer a series of questions to determine which education credit the student qualifies for.
Question 23:
Has the student already claimed the American Opportunity Credit (AOC) in any of the previous 4 years?
* You can confirm this by asking your client or reviewing their prior-year tax return.
* If they have claimed it in any of the last 4 years, select Yes.
* If they haven’t claimed it or aren’t sure, select No.
Note: If the answer to Question 23 is Yes, the student will not be eligible for the AOC and will instead qualify for the LLC if they meet the other eligibility criteria.
If Question 23 was No, you will now answer Question 24:
Was the student enrolled at least half-time for at least one academic period during the tax year? (Box 8 on 1098-T)
* If yes, select Yes.
* If no, select No.
Note: If the answer to Question 24 is No, the student will not be eligible for the AOC and will instead qualify for the LLC if they meet the other eligibility criteria.
If Question 24 was Yes, you will now answer:
Did the student complete their undergraduate degree or first 4 years of college before the tax year? (Box 9 on the 1098-T)
* If yes, select Yes.
* If no, select No.
Note: If the answer to Question 25 is Yes, the student will not be eligible for the AOC and will instead qualify for the LLC if they meet the other eligibility criteria.
If Question 25 was No, you will now answer:
Has the student been convicted of a felony for possessing or distributing a controlled substance?
* If yes, select Yes.
* If no, select No. (This is the most common answer, but always confirm with your client.)
Note: A felony drug conviction can disqualify a student from claiming the American Opportunity Credit (AOC).
The software will automatically determine which credit the student qualifies for:
* Line 27 - American Opportunity Credit (AOC)
* Line 31 - Lifetime Learning Credit (LLC)
Enter the amount from Box 1 of the 1098-T
* Up to $4,000 can be entered on Line 27.
If there is an amount in Box 5 (Scholarships/Grants):
* Use the formula: Box 1 - Box 5 = Eligible Amount
Other Qualifying Expenses (AOC Only):
* For AOC, you can add other eligible expenses:
* textbooks, lab fees, equipment, etc
Key Takeaways:
✅ AOC is available for the first 4 years of higher education.
✅ Must be at least a half-time student to claim AOC.
✅ Scholarships & grants (Box 5) may reduce the eligible credit amount.
✅ The LLC is available for unlimited years but is non-refundable.
You can also view the video tutorial here: