The Education Tax Credit books

Alert: One of the premises of my first book and the recommendations in some of these articles was that taxpayers do not have to have a 1098-T in order to claim an education credit. That will no longer be the case after 2015. The new requirement becomes effective for tax years following the date of enactment so it will not normally apply until the 2016 tax year (filed in 2017). The new law was passed June 29, 2015 as part of the Trade Preferences Extension Act of 2015 and added the requirement to IRC § 25A(g)(8). A similar requirement exists for the tuition deduction.

While taxpayers will be required to have a 1098T, institutions are often not always required to provide one. Because of that discrepancy, the IRS has proposed regulations that will change reporting requirements to be compatible with the new law. The regulations may not become effective before the next tax year, but within the regulations is an exception that taxpayers may use until the regulations become final.

Until the proposed regulations under §§ 1.25A–1(f) and 1.6050S–1(a) are published in the Federal Register as final regulations, a taxpayer (or the taxpayer’s dependent) (other than a non-resident alien) who does not receive a Form 1098–T because its institution is exempt from furnishing a Form 1098–T under current § 1.6050S–1(a)(2) may claim an education tax credit under section 25A(a) if the taxpayer (1) is otherwise qualified, (2) can demonstrate that the taxpayer (or the taxpayer’s dependent) was enrolled at an eligible educational institution, and (3) can substantiate the payment of qualified tuition and related expenses.

AOTC Toolkit

The following articles and tools are being provided to assist in claiming education credits and particularly the American Opportunity Tax Credit (AOTC). The toolkit has been mentioned on my blog, Switched Keys. Most of these tools have been incorporated in one or both of my books on Education Tax Credits. Both are available in digital and print.

The toolkit has also been recommended to readers of my books, but since most of the articles are part of the book, they may only find use for the AOTC qualification flowcharts and AOTC worksheet. The sidebar contains links to the books if you haven't already purchased your copy.

Comments, questions, and corrections are welcome and can be submitted through the contact form on Switched Keys.

All in One

Education Credit Toolkit: The articles and tools in one zip file.

The Articles

Education Credit Regulations: A discussion of the AOTC and the regulations that permit inclusion of grants and scholarships to increase qualifying expenses and the credit. Coordinating with other education programs is also discussed.

Education Credit Preparation: Specific instructions for accessing and retrieving expense information from local institutions UT Tyler and TJC. Can be provided to the client.

Education Credit Calculations: A method for tabulating qualifying expenses and calculating the credit. Includes the spreadsheet version of the AOTC worksheet.

The Tools

AOTC Flowcharts: The Student Qualifications Test assists in determining if the taxpayer qualifies for the credit. Same chart as published by the IRS. The Refundable Credit Test helps determine if the taxpayer qualifies for the refundable portion of the AOTC. Instead of the IRS outline of those who do not qualify, this flowchart identifies those that do qualify.

AOTC Worksheet: The AOTC worksheet assists in maximizing the AOTC qualifying expenses and calculating the amount of taxable scholarships. Includes examples from IRS publications and regulations. Not the same as related IRS published worksheets.

New: Web Version AOTC Worksheet

Related files

While preparing tax returns with education credits I started a mini-campaign to educate other preparers, institutions, and taxpayers about the extense of education benefits available with the AOTC. These are some of my working files.

Education Credit Regulations PowerPoint: Presentation reviewing Education Credit Regulations.

Education Credit Prep and Calc PowerPoint: How to prepare and calculate AOTC.

Education Credits Flyer: "Can I Get An Education Credit To Go With That Pell Grant?" Flyer explaining the potential of AOTC for students.

Education Credits in TaxWise: Step by step guide to entering Pell grant-enhanced education credits in TaxWise

Public News Release

College News Release

Accountant Appeal Letter: Letter to local accountants to encourage consideration of grants and scholarships for education credits.

College Appeal Letter