The Earned Income Credit (EIC) is a refundable federal tax credit that may reduce your tax and increase your refund if you qualify. It’s designed to help working individuals and families with low to moderate income amounts. For full details, see IRS Publication 596. Rules for All Taxpayers To qualify for the EIC in 2025, […]
When determining eligibility for the Earned Income Credit (EIC), not all income is treated the same. Only certain types of pay from working are considered “earned income.” Many common payments and benefits are excluded and should not be counted when calculating earned income for the credit. For full details and examples, see IRS Publication 596. […]
Form 8862, Information To Claim Certain Credits After Disallowance, is used to claim the Earned Income Credit (EIC) if this credit was previously reduced or disallowed by the IRS, and you now wish to claim the credit on this year’s return. To enter information regarding Form 8862 in the TaxAct program, follow the steps below. […]
What’s new in 2025: The maximum Child Tax Credit (CTC) increases from $2,000 to $2,200 per qualifying child. Up to $1,700 of the credit may be refundable as the Additional Child Tax Credit (ACTC). Both the credit amount and refundable portion will be adjusted for inflation, so it may increase over time. The enhanced credit […]
According to IRS Publication 503, child and dependent care expenses must be work-related to qualify for the Child and Dependent Care Credit. Work-related expenses are those that enable you to work or look for work. If you are married, both spouses generally must be working or seeking employment unless one spouse is a full-time student […]
On your IRS Form 2441: Child and Dependent Care Expenses, the amount listed as “paid to providers” must equal the amount entered as qualified expenses for your dependent(s) plus any dependent care benefits provided by the employer. The amount in the Amount paid in 20YY field must equal your qualified child and dependent care expenses plus […]
If you paid child and dependent care expenses, but the individual care provider has not provided, and will not provide their Social Security Number (SSN) to you, you may still be able to claim the Child and Dependent Care Credit. You must show that you have completed your due diligence to obtain the information. You […]
If filing jointly, figure your and your spouses earned income separately. Your earned income amount will transfer to Line 4 of Form 2441, and your spouse’s earned income will transfer to Line 5 of Form 2441. If your spouse was a student or disabled, see the IRS Instructions for Form 2441. If you reported amounts on […]
To complete Form 2441, follow the steps below. At the end of the entry process: If the credit is not allowed, a reason is shown. If the credit is allowed, the amount will be displayed. The credit carries to Form 2441 and Form 1040, Schedule 3. Online Dashboard From within your TaxAct return, click Deductions […]
If you see “PRI” printed next to Line 1 of Form 1040, it’s because one of the following is true: You entered an amount of wages received for work done as an inmate in a penal institution (i.e. a prison or jail). You may have entered wages (or other earned income), and accidentally indicated that […]
When there is an amount in Box 4 and/or Box 6 of the Form 1098-T, Tuition Statement, and you claimed an education credit in a prior tax year (i.e., American Opportunity Credit or Lifetime Learning Credit), you need to recalculate that credit, taking into account the adjustment, and then enter the decrease in credit on the […]
Student loan interest will be reported to you on Form 1098-E, Student Loan Interest Statement. When you report this in the TaxAct program, the information is transferred to Schedule 1 (Form 1040). Follow the steps below to enter information from Form 1098-E. Online Dashboard From within your TaxAct return, click Deductions & Credits. On smaller […]
The American Opportunity Tax Credit can be claimed for expenses for the first four years of post-secondary education. It is a tax credit of up to $2,500 of the cost of qualified tuition and related expenses paid during the taxable year. Of the total credit amount, 40%, a maximum of $1000, is refundable. The remaining […]
The IRS allows qualifying education expenses to be applied to one of the following education benefits: American Opportunity Credit Lifetime Learning Credit Tuition and Fees Deduction (Tax Years 2020 and earlier only) See IRS Publication 970 for more information about education credits. To enter your education expenses and qualifications, follow the steps below. Online Dashboard […]
The Earned Income Credit (EIC) is calculated by the program automatically if the return qualifies for the credit. To remove the credit from a return that qualifies for it, you need to select the item that disqualifies your return or check the box I don’t want to or cannot claim the earned income credit this […]
If your return was rejected by the IRS because a child claimed on your return was already claimed as a dependent AND for the Earned Income Credit (EIC) on someone else’s return, you will need to delete this child as a dependent and delete the child from Schedule EIC. To remove a child as a […]
The disability status information is transferred to other parts of your TaxAct return: on Schedule R, Credit for the Elderly or the Disabled, to identify if an individual may be classified as disabled, in the Earned Income Credit (EIC) calculation to help determine if an individual can be claimed on another return and for the […]
TaxAct® automatically calculates the Earned Income Credit (EIC) based on the information in your return. If you have a dependent that is a qualifying child, enter your dependent information (including name, SSN, relationship to you, year of birth, number of months lived with you, and student status). TaxAct will then use dependent information in the […]
The Child Tax Credit (CTC) amount is affected by your income amount. This nonrefundable credit begins to phase out at the following Adjusted Gross Income (AGI) levels: $400,000 MFJ $200,000 MFS/S/HOH/QW Notes: […]
Per IRS Instructions for Form 1098-T: Instructions for Student You, or the person who can claim you as a dependent, may be able to claim an education credit on Form 1040 or 1040-SR. This statement has been furnished to you by an eligible educational institution in which you are enrolled, or by an insurer who […]
See IRS Publication 503 for details about who is considered to be a qualifying person for Form 2441 purposes.
To enter your scholarship or fellowship income (if scholarship or fellowship income was reported on Form 1098-T), go to the Form 1098-T – Entering in Program FAQ. From within your student worksheet (if you need help accessing your student worksheet in the TaxAct program, go to our Student Worksheet Entries FAQ), continue with the interview […]
To be eligible for the American Opportunity Credit, a student must not have completed the first four years of post-secondary education as of the beginning of the taxable year. The “first four years” refers to the amount of academic credit that has been awarded. Generally, it’s what schools use to classify students (junior, senior, etc.). […]
If the taxpayer was under age 24 at the end of the year and certain conditions apply, they may only qualify to receive the non-refundable portion of the American Opportunity Credit, and not the refundable portion. In the TaxAct program, if the information for the student (who is also the taxpayer on the return) is […]
Per IRS Publication 970: “Qualified education expenses paid by a dependent you claim on your tax return, or by a third party for that dependent, are considered paid by you.” The educational institution sends a Form 1098-T Tuition Statement to the student to report the expenses. For more details about what is reported on Form […]
Based on the Modified Adjusted Gross Income (MAGI) on a return, the student loan interest deduction allowed on the return may be phased out or eliminated. The TaxAct program automatically calculates the eligible amount of student loan interest deduction for the return, based on the student loan interest expense entered in the program (in conjunction […]
The Child and Dependent Care Credit is a nonrefundable credit. A nonrefundable credit can reduce your tax liability to 0 (zero), however it cannot result in a refund, which means if your tax liability is $0, you will not receive this credit because there is no tax to reduce. For more information, go to IRS […]
If your employer provided dependent care benefits under a qualified plan, but there is no amount in Box 10 of Form W-2 Wage and Tax Statement, you should contact your employer to determine if they need to issue you a Form W-2-C Corrected Wage and Tax Statement. The IRS will receive a copy of the […]
Either you or your dependent (but not both) can claim the American Opportunity Credit or the Lifetime Learning Credit. If you claim the student as a dependent, only you can claim the credit. Treat any expenses paid by your dependent as paid by you. If you do not claim the student as a dependent, the […]
The child and dependent care credit is a percentage of your qualified expenses. Your expenses are subject to both the earned income limit and the dollar limit. The credit percentage is based on your Adjusted Gross Income (AGI). Finally, the credit is limited to the amount of your tax liability. Earned income limit. The amount […]
For purposes of the education credits and tuition deduction, the cost of a computer qualifies as an education expense if it is needed as a condition of enrollment. For more information on qualified education expenses, go to IRS Instructions for Form 8863 Education Credits (American Opportunity and Lifetime Learning Credits) or Form 8917 Tuition and […]
Tuition paid with student loan proceeds is a qualified education expense for purposes of the education credits. For more information on qualified education expenses, see IRS Instructions for Form 8863 Education Credits (American Opportunity and Lifetime Learning Credits). Related Links 8863 Education Credits American Opportunity Credit Lifetime Learning Credit Publication 970 Tax Benefits for Education […]
Per IRS Publication 970, Tax Benefits for Education, page 11: American Opportunity Credit Who Can Claim the Credit? Generally, you can claim the American opportunity credit if all three of the following requirements are met. You pay qualified education expenses of higher education. You pay the education expenses for an eligible student. The eligible student […]
Per IRS Instruction 1040, page 19: Step 3: Does Your Qualifying Child Qualify You for the Child Tax Credit or Credit for Other Dependents? 3. Was the child under age 17 at the end of the tax year? No. You can claim the credit for other dependents for this child. Check the “credit for other […]
If you are a divorced or a separated parent, your child may still be a qualifying person for the Child and Dependent Care Credit even if you cannot claim your child as a dependent. Per IRS Publication 503 Child and Dependent Care Expenses, page 4: Child of divorced or separated parents or parents living apart. […]
Per IRS Publication 970 Tax Benefits for Education, page 11: Who Can Claim the Credit? Generally, you can claim the American opportunity credit if all three of the following requirements are met. You pay qualified education expenses of higher education. You pay the education expenses for an eligible student. The eligible student is either yourself, […]
TaxAct® supports the entry of up to twelve (12) Care Providers on Federal Form 2441 Child and Dependent Care Expenses. The IRS Form 2441 that prints with the return only allows two providers to be listed and then there is an overflow sheet that prints to list the remaining providers. If you need to enter […]
To view the EIC calculation worksheet in the TaxAct program: Online Navigation Instructions You need to view the worksheet as a print PDF; if you need help, go to our Printing Your Return and Individual Forms FAQ. Desktop Navigation Instructions From within your TaxAct return (Desktop), click Forms in the options bar to view Forms […]
To easily see the rules regarding the Earned Income Credit (EIC), you can refer to Table 1 “Earned Income Credit In a Nutshell” on page 2 of IRS Publication 596 Earned Income Credit. Note that any link in the information above is updated each year automatically and will take you to the most recent version […]
Per IRS Instructions for Form 2441 Child and Dependent Care Expenses, page 1: Married persons filing separately checkbox. Generally, married persons must file a joint return to claim the credit. If you claim the credit and your filing status is married filing separately, you are required to show you meet the special requirements listed in […]
The amount of child care expenses you can take (or have on your Form W-2 Wage and Tax Statement) is limited to the lower of your (or your spouse’s, if applicable) earned income. Per IRS Publication 503 Child and Dependent Care Expenses, page 11: Earned Income Limit The amount of work-related expenses you use to […]
Per IRS Publication 970 Tax Benefits for Education, page 5: Tax-Free Scholarships and Fellowship Grants A scholarship or fellowship grant is tax free (excludable from gross income) only if you are a candidate for a degree at an eligible educational institution. A scholarship or fellowship grant is tax free only to the extent: It doesn’t […]
TaxAct® currently supports the entry of up to 50 copies of Form 1098-T Tuition Statement. Note that any link in the information above is updated each year automatically and will take you to the most recent version of the webpage or document at the time it is accessed.
Per IRS Publication 503 Child and Dependent Care Expenses, page 4: You Must Have Earned Income To claim the credit, you (and your spouse if filing jointly) must have earned income during the year. Earned income. Earned income includes wages, salaries, tips, other taxable employee compensation, and net earnings from self-employment. A net loss from […]
Since one of the tests to claim the child and dependent care credit on your return is that you must pay child and dependent care expenses so you (and your spouse if filing jointly) can work or look for work (i.e. the Work-Related Expense Test). If the expense is not considered “work-related,” you are not […]
General Limits: In figuring the Child and Dependent Care credit, take into account qualifying expenses up to a limit of $3,000 for one dependent, or $6,000 for two or more dependents. The $3,000 or $6,000 limit applies even if your actual expenses are much greater. This $3,000 or $6,000 limit must be reduced by tax-free […]
Per IRS Instructions for Form 2441 Child and Dependent Care Expenses, page 3: Column (c) If the care provider is an individual, enter his or her SSN. Otherwise, enter the provider’s employer identification number (EIN). If the provider is a tax-exempt organization, enter “Tax-Exempt” in column (c). U.S. citizens and resident aliens living abroad. If […]
Per IRS Publication 503 Child and Dependent Care Expenses, page 2: Dependent care benefits. If you received any dependent care benefits from your employer during the year, you may be able to exclude all or part of them from your income. You must complete Form 2441, Part III, before you can figure the amount of […]
Your child must be under 17 at the end of the tax year in order to qualify for the Child Tax Credit. Per IRS Publication 17 Your Federal Income Tax, page 108: Qualifying Child for the CTC A child qualifies you for the CTC if the child meets all of the following conditions. The child […]
Massachusetts College Tuition Deduction Massachusetts allows a deduction for undergraduate tuition if the total paid exceeds 25% of the taxpayer’s Massachusetts adjusted gross income. Qualified expenses include only those expenses designated as tuition or mandatory fees required for enrollment at an eligible educational institution The deduction is equal to the amount by which the tuition […]
The Patient Protection and Affordable Care Act, signed into law on March 23, 2010, amends Section 108(f) of the Internal Revenue Code of 1986 to expand the exclusion from taxable income the assistance received for student loan forgiveness for health care professionals working in underserved areas. Per the Patient Protection and Affordable Care Act, page […]
For purposes of calculating the Earned Income Credit (EIC), unemployment is not included in earned income but is included in Adjusted Gross Income (AGI). If your AGI results in a lower EIC, you must use that amount. The TaxAct® program will automatically do this calculation for you on the Form 1040 Earned Income Credit Worksheet. […]
Form 1098-T, Tuition Statement, is sent to a student from their college and reports the following: The payments received for qualified tuition and related expenses; The amount billed for qualified tuition and related expenses; The amount of scholarships and grants administered and processed for the student by the college; If the student was considered enrolled at […]
If you are claimed as a dependent on someone else’s tax return (such as your parent’s), then your qualifying educational expenses can only be used on your parent’s return. Your return would not qualify for the education credits or deduction on your own return, because you are claimed as a dependent on another taxpayer’s return. […]
Per IRS Instructions for Form 8917, page 2: Deduction extended. The tuition and fees deduction is extended for qualified tuition and fees paid in calendar years 2018, 2019, and 2020. Don’t claim the deduction for expenses paid after 2020 unless the credit is extended again. Use Form 8917 (Rev. January 2020) and these instructions for […]
To review your child tax credit and additional child tax credit in the TaxAct program, go to our Dependents – Entering and Reviewing FAQ. The TaxAct program automatically calculates your credit amount based on your dependent and income information. Some taxpayers cannot take full advantage of the child tax credit because their credit amount is […]
The Child Tax Credit is a nonrefundable credit. This means if your tax liability is $0, you will not receive this credit because there is no tax to reduce. However, you may receive an additional child tax credit calculated on Schedule 8812 Additional Child Tax Credit and reported on Line 28 of IRS Form 1040 […]
One of the eligibility requirements for the child and dependent care credit states that the childcare must be provided so you (and your spouse if filing jointly) could work or look for work. However, if your spouse did not have a job and had no earned income, you still may take the credit if he […]
Two tax credits that can help you offset the cost of higher education are the American Opportunity Credit and the Lifetime Learning Credit. American Opportunity Credit You may be able to take a credit of up to $2,500 for qualified education expenses for each student who qualifies for the American opportunity credit. This credit equals […]
The amount of your nontaxable combat pay should be shown on your Form W-2 Wage and Tax Statement, Box 12, code “Q.” For information about how to report this in your TaxAct return, go to our Form W-2 – E-Filing with Nontaxable Combat Pay FAQ. Per IRS Publication 3 Armed Forces’ Tax Guide, page 24: […]
Even if your student hasn’t graduated from high school, you still may be able to get an education credit for the child’s college-level classes. The student qualifies for the tuition deduction if he or she is enrolled at an eligible school. You must have paid tuition to the college and not the high school in […]
The amount of dependent care benefits you can exclude or deduct is limited to the smallest of: The total amount of dependent care benefits you received during the year, The total amount of qualified expenses you incurred during the year, Your earned income, Your spouse’s earned income, or $5,000 ($2,500 if married filing separately) Any […]
If you want to indicate that you can be claimed as a dependent on someone else’s return, go to our Entering in Program – Dependent on Other Return FAQ. Related Links Form 1098-T – Entering Education Credits and Deductions in Program
Form 1098-T should be sent for anyone who had education expenses or received scholarships, fellowships, or grants. If you, your spouse, or your dependent had education expenses and did not receive Form 1098-T, you may need to still report the amounts on the return. If your expenses are more than your scholarships, fellowships, and grants, you may […]
Per IRS Instructions for Form W-2, page 7: Instructions for Employee Box 10. This amount includes the total dependent care benefits that your employer paid to you or incurred on your behalf (including amounts from a section 125 (cafeteria) plan). Any amount over $5,000 is also included in box 1. Complete Form 2441, Child and […]
A qualified tuition program (also known as a 529 plan) is a program set up to allow you to either prepay or contribute to an account established for paying a student’s qualified education expenses at an eligible educational institution. Your state government or eligible educational institution can tell you whether or not they participate in […]
The EIC is based on several factors such as age, earned income, adjusted gross income, filing status, whether the taxpayer had no qualifying child, had one qualifying child, or had two or more qualifying children, etc. The EIC worksheets and tables can be accessed on IRS Instruction 1040 1040 and 1040-SR Instructions, pages 46-56. You can […]
You may be able to claim the child and dependent care credit if you pay for the care of a qualifying individual so you can work or look for work. If you are married, both spouses must have earned income to qualify for the credit. Exceptions apply to disabled or student spouses. The amount of […]
TaxAct® will determine which education benefit is most advantageous for you based on the data entered on your return (such as income, filing status, amount of qualified expenses, etc.). See Education Credits & Deductions – Enter, Review, Modify for instructions on how to enter or modify your education information in TaxAct, or to compare the […]
Generally, you can claim the American Opportunity Credit if: You pay qualified higher education expenses, You pay the education expenses for an eligible student, and The eligible student is yourself, your spouse, or a dependent you claim on your tax return. Eligible Student To be eligible for the American Opportunity Credit, the student must have […]
Either you, your dependent, or both of you may enter Form 1098-T Tuition Statement and other education information in TaxAct®. If you claim a dependent, only you can claim the education credit. Therefore, you would enter Form 1098-T and the dependent’s other education information in your return. If you do not claim a dependent, the […]
Qualified Tuition Programs (QTPs) are different from Coverdell Education Savings Accounts (ESAs). QTPs include state (529 plans) and private plans. With QTPs, ownership remains with the contributor rather than passing to the designated beneficiary. In other words, a taxpayer can own the QTP, have distributions made to them, and report Form 1099-Q Payments From Qualified […]
