How to edit form 8863 line 22 (3)

[brianbd1989]

I am also having this issue. I attended the same school in 2020. the question asked: "Did the student receive Form 1098-T from this institution for 2020 with box 7 checked?"

The correct answer is no. The 1098-T I received both last year and this year have NOT have box 7 checked. I also did not indicate this when completing this year's form. But yet on my return this year, it marked the answer "Yes."

Will this change my return amount? Will the IRS audit? Or not a big deal? Thank you. 

[KrisD15]

Form 8863 line 22 (3) reports if box 7 was checked on your 2020 1098-T. 

The answer should show as "No", UNLESS the 2020 Form 1098-T had a number in Box 2 which is doubtful. Box 2 has not been authorized for use since 2016, but on occasion a school still (incorrectly) uses it. 

The only screen that asks about the 2020 1098-T box 7 first asks about the 2020 1098-T Box 2. 

You should PROBABLY be answering "Yes"  to "Did you get a 1098-T from this school last year" and PROBABLY "No" to was there an amount in Box 2,  in which case the program does not ask about Box 7. 

IF your 2020 1098-T has an amount in Box 2, you would need to answer the question about Box 7. Please check the 2020 1098-T to verify there is no entry in Box 2. If there is, then you need to continue and answer about Box 7. 

The only time the program asks about Box 7 for the 2021 Form 1098-T is on the 1098-T entry screen. 

Please revisit the entry screen for the 1098-T and edit if necessary. If the 1098-T was uploaded, it may need to be manually entered. 

The idea behind the questioning is this-

Years ago, schools reported what was BILLED in a calendar year (Box 2) but the IRS only cares about what was PAID (Box 1). IF a school uses Box 2 to report what was BILLED, Box 7 comes into play BECAUSE you can include the expenses of the first three months of the following year IF they were paid ahead. That is what Box 7 indicates. 

So for 2021, you can claim expenses PAID for 2021 and/or the first three months of 2022. (of course next year you can't again use those same expenses) 

If the school correctly uses Box 1, Box 2 is not needed nor used. 

Since you are using TurboTax Desktop, you may want to check for updates before revisiting the Education Section. 

[musician98]

Thank you, @KrisD15! I came across the same issue. I started school in January 2021 but paid some tuition in 2020. I didn't realize until this year that I got a 2020 1098-T, so I didn't include it in my taxes last year. My 2020 1098-T has nothing in box 2 but it does have an amount in box 1 and box 7 is checked. I am planning to do an amendment to my 2020 taxes.

For 2021, after filling out the step-by-step information, Form 8863 Part III #22 a (3) (Did the student receive Form 1098-T from this institution for 2020 with box 7 checked?) has the answer as NO. But technically I did receive a 1098-T in 2020 with box 7 checked. It sounds like TurboTax puts NO, because box 2 was empty. Is that how it works? 

If I amend my 2020 taxes to add the 1098-T, will it be flagged because I said NO on this question in 2021? 

[MarilynG]

No, your 2020 Amended Return will not be flagged for an incorrect 1098-T entry on your 2021 return.   Have you already filed your 2021 return?  If not, you could change your answer.

Basically, the checked Box 7 means you paid for Education Expenses in 2020 for 2021.  In order to get credit for what you paid in 2020, you need to include the amount of the expense on your 2020 return and the amount you paid. 

The IRS only wants to give you credit for what you actually paid each year (even though it was the next year), so it can be confusing with the way schools report on the 1098-T.

If your 2021 1098-T correctly shows what was billed/paid in 2021, no worries.  The IRS also realizes that schools don't always report correctly.   Save your payment receipts for each year.

Here's more info on Form 1098-T.

@musician98

[musician98]

Thank you, @MarilynG. There's something weird about how the questions are set up. What's on the Wks page is not exactly what's on the 8863 form.  On the 1098-T Wks page, the only question for 2020 is whether the 2020 form had both box 2 filled in and box 7 checked. The correct answer for my situation is NO, and then it leaves the answer to Part III 22 (a) 3 as NO (which is not correct, because that question only asks about box 7, which was checked). If I put YES, then it marks YES on 8863. Technically I should be answering NO to the question on the Wks form, but then it doesn't put the right answer (YES) on the 8863. 

[JillS56]

Do you get the correct result on the return?   As long as you are getting the correct result on the 8863 do not worry about what the worksheet shows because it does not get filed.    The worksheets are handy if there is a problem with the actual form, otherwise, if the form itself is correct, ignore them.

[musician98]

@JillS56, yes, I did get the right answer on the form. I just had to put the wrong answer on the worksheet, which seemed weird. Thank you!