- Adding Dependents/Household Members.
- Determining Qualifying Dependents.
- Dependent with Form 1098-T, Tuition Statement.
- Dependent Education Tax Credits/Tuition & Fees Deduction.
- Child Tax Credit/Additional Child Tax Credit.
- Earned Income Credit.
- Child and Dependent Care Credit.
- Troubleshooting Common Issues.
Add the "Dependent and Household Member Information" Page to the Return:
Click "Basic Info" from the list to expand the pages in this section.
Select the "Filing Status Information".
The Dependent and Household Member Page question is within the "Filing Status Information" Page.
Do you have Dependents and Household Members?
Select "Yes", and then click "Save and Continue". The Dependent & Household Member Page will open after the Taxpayer Information/Spouse Information page are completed.
IMPORTANT: Dependents will not carry over to the return unless this question is answered "Yes".
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Dependent and Household Member Page:
These questions are used to determine if a dependent or household member qualifies for the following:
- Qualifying Child or Qualifying Relative
- Child Tax Credit
- Additional Child Tax Credit
- Earned Income Credit
- Child and Dependent Care Credit
- American Opportunity Credit
- Lifetime Learning Credit
- Tuition and Fees Deduction.
Select "Help Me Decide" anytime more information is needed for determining if a dependent qualifies.
Click the "Pencil" to see further questions for one specific question.
See below for specific details on each section/question.
IMPORTANT REGARDING THE EARNED INCOME CREDIT:
For the Child Tax Credit and Earned Income Credit you must answer the additional questions. These credits will not be included in any return that has not completed all required questions.
You must answer these questions for every dependent or household member added in to the return.
Form 8867 must be completed anytime a return has the Refundable Child Tax Credit, Earned Income Credit, or the American Opportunity Credit.
Dependent Special Conditions Page:
This page is needed when a dependent/household member have any of the following:
- Qualifying Student Dependent with no Education Expenses to report.
- Disabled
- Kidnapped
- Form 8332; Claiming child that did not live with you due to divorce or decree.
- Form 2120; Multiple Support Agreement.
- When dependent is "Parent", and they qualify taxpayer to file as Head-of-Household, a "Parent is Dependent" question will
populate on this page. You must check the box to treat parent as dependent. (not shown).
Qualifying Dependent
Additional Dependent Qualification Information can be accessed by clicking the "pencil" next to Dependent question or by selecting "Help me decide".
Dependent Qualification Information Page
Was this persons income $4,000 or more.
Select the applicable answer for this dependent/ household.
Can or will anyone else claim this person as a dependent?
Yes: This person can/will be claimed by another taxpayer.
No: This person cannot be claimed by another taxpayer.
Did you provide more than half of the persons support?
Yes: The taxpayer provides more than 50% of this persons support.
No: The taxpayer did not provide over half of the persons support.
Did this person provide more than half of their own support?
Yes: This person provided over 50% of their own support.
No: This person did not provide more than half of their own support.
Dependent Education Expenses Page:
Select "Yes" for Education Expenses and the Dependent Education Expenses Page will open after selecting "Save" on the Dependent and Household Member Information main page.
Select "Help Me Decide" when unsure, a page will open with questions, the system will determine this with the answers given.
American Opportunity Credit
IMPORTANT:
Beginning Tax Year 2016 a dependent must have received a Form 1098-T to qualify for the partially refundable American Opportunity Credit. The IRS will not allow this credit if the Form 1098-T information is missing.
- 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. This credit is 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 you MAGI is $90,000 for filing status Single, Head of Household, or Qualified Widower ($180,000 for Married Filing Jointly).
Lifetime Learning Credit
- 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).
Tuition and Fees Deduction
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. This means you can claim this deduction even if you don't itemize deductions on Schedule A (Form 1040).
Qualified Educational Expenses:
Required Education Expenses Paid to Educational Institution:
Enter here the amount from Box 1 or Box 2 of the Form 1098-T, Tuition and Fees Statement
Other Needed Course Related Materials:
Enter here any other qualified education expenses (i.e. Books, Supplies, etc).
Education Expenses Adjustments:
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.
Box 6 of the Form 1098-T Tuition Statement.
The Credit/Deduction is calculated using any remaining expense amount after adjustments.
Qualifying Questions:
The following questions must be answered, failure to answer all questions will result in the return not including a Education Tax Credit or Deduction.
Was This Person a Student?
Yes: This person was enrolled in a qualified educational institution a minimum of 5 months in the current tax year in a program leading towards a post-secondary degree, certificate, or equivalent.
No: This person was not enrolled in either a qualified education institution or/and did not attend for at least half-time, etc.
IMPORTANT:
The selection made for "How should the system treat these expenses" will determine if a qualifying return includes a Education Tax Credit or
the Tuition & Fees Deduction. (See the following information for specific details).
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 carry over the applicable selec
If a dependent qualifies for both the American Opportunity Credit and the Lifetime Learning Credit, the American Opportunity Credit will be given. When the Lifetime Learning Credit is desired instead, check the box to Elect the Lifetime Credit.
IMPORTANT:
Beginning Tax Year 2016 a dependent must have received a Form 1098-T to qualify for the partially refundable American Opportunity Credit. The IRS will not allow this credit if the Form 1098-T information is missing.
Each Dependent can have (2) Form 1098-T's. You will not be able to use this system if a dependent has (3) or more Form 1098-T's to enter.
Child and Dependent Care Expenses:
The Child and Household Member main page will display if the dependent is eligible to take the Child and Dependent Care Credit. If a dependent does not qualify, you will not be able to enter that section.
Select "Yes" to include Child and Dependent Care expenses for an eligible child/dependent. the page will open after selecting "Save" on the Dependent and Household Member Information main page.
Child and Dependent Care Credit Information page is where you enter the qualifying dependent care expenses. Do not include any dependent care expenses for any other dependent. Each dependent is entered individually.
After expenses are entered, select Save and you will see the qualifying expenses are now displayed on the Dependent and Household Member main page.
Earned Income Credit and Child Tax Credit:
Select the applicable answer for the Child Tax Credit and Additional Child Tax Credit.
The qualifying Child must be 16 or younger to qualify to take the Child Tax Credit and Additional Child Tax Credit
The additional questions in the Child Tax Credit section are required to be answered.
Select the pencil to open the additional questions page.
The questions on this page pertain to the Earned Income Credit. You must complete all questions for the Earned Income Credit to generate.
The Child Tax Credit, Additional Child Tax Credit and the Earned Income Credit will automatically generate to the Form 1040 when applicable. Please note Form 8867 must be completed for the Earned Income Credit to be included in the return. Form 8867 is located in the Credit list of Forms you can add, and in the "Edit My Return" list.
Please see our page on Adding Forms & Schedules for more information.
Troubleshooting:
The following is not tax advise, and is for informational purposes only. Only the most common issues are listed. See IRS Form 8863 Instructions, Form 8917 Instructions, and the IRS website for specific tax rules.
Issue: Qualify for both Education Credit & Tuition & Fee Deduction, and return giving you wrong one.
- Select Tax Credit to include Education Credit.
- Select Adjustment to include Tuition & Fee Deduction.
Reason:
The question "How should the system treat the Education Expenses?" is answered "Let the system decide".
When "Let the system decide" is selected the return will have which ever amount is greater between the Education Credit or
Tuition & Fee Deduction.
Note: The calculation is based on the amounts of education credits and deduction alone. It does not include the result these have on the tax return.
Issue: Return not giving the American Opportunity Credit. (Lifetime Learning Credit has populated).
Tax Law Change: Beginning Tax Year 2016, the IRS requires information from Form 1098-T be included when claiming the refundable
American Opportunity Credit. The nonrefundable Lifetime Learning Credit or Tuition & Fee Deduction any time Form 1098-T information is not included.