Tax form 8863 — new features that provide new chances

The detailed tax form 8863 instructions can be easily found on the website www.irs.gov/form8863. Despite this fact, the new arrangements that are incorporated into 8863 tax from are worth paying closer attention.

A mandatory character of a separate form 1098-T

Tax year 2016 is an incipient period from which having received a 1098-T from issued by an eligible education organization is mandatory prerequisite. The data provided by the aforementioned document are an indispensable help when applying for tuition and fees deduction.

On the other, and this requirement does not apply for all students. In some cases, when, for example, an education institution is nor obliged to forward to a student a particular form 1098-T as the current situation of the particular student determines the fact that qualified education expenses are paid exclusively with scholarships or do not exceed a formal billing arrangement. As a consequence, in the aforementioned cases the taxpayer may apply for education benefits without a relevant additional form if this person otherwise qualifies, can prove that taxpayer (or dependent of taxpayer) was inscribed at an entitled educational organization and is able to justify with proofs the payment of qualified tuition and other expenses that were associated with this payment.

The second new issue concerning IRS tax form 8863 is prohibition on claiming the American opportunity credit. The inclusion of the American opportunity credit claim in a current 8863 tax form can result in inaccessibility of credit for up to ten years.

Another new feature is an alternate requirement regarding taxpayer identification number. The above-mentioned number required, taking into account the due date of return. This, in turn, means that if someone does not have a TIN expressed with a due date return, he or she is not eligible for applying for the American opportunity credit or a corrected tax 8863 return for 2016.

Federal tax form 8863 for 2016 introduces also a limitation regarding modified adjusted gross income (so-called MAGI). The restriction of lifetime learning MAGI totals $131,000
if someone is married and applies for a credit jointly with his or her spouse. In the case of singles, qualified widow and heads of households the acceptable MAGI limit amounts $65,000.

Hints for Fellowships, Scholarships and Pell Grants.

It is stated that all those types of financial support reduce the amount of acceptable expenses for education, and in a result form 8863 tax reimbursement. Fortunately, one can shun this situation by a reasonable planning and smart forward thinking. It is noteworthy that some organizations like for example specializing in form 8863 Turbotax provide a comprehensive support concerning this issue. Form 8863 regulation state explicitly that fellowships, scholarships as well as pell grants are not treated as tax-free if a student has already included those amounts in his or her income, or they were included in other costs like for example room or board that do not represent qualified expenses.

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