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Lesson 1 of 6 · 3:06
Schedule A – Basic Navigation
Find the Itemized Deductions menu and enter mortgage interest, real estate taxes and cash gifts to charity for Schedule A.
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Written instructions
Open the deductions section
In the left menu under Federal Section, click Deductions. On Let's see how we can cut your tax bill, choose Select my forms and click Continue.
Alternatively, type a keyword such as mort into Form Finder and click the suggestion (for example Go to form Home Mortgage Interest now) to jump straight to that form.
Begin Itemized Deductions
The Deductions page is split into Adjustments, Standard Deduction, Itemized Deductions, Credits Menu, Compare Deductions and more. Click Begin next to Itemized Deductions.
Review the Schedule A categories
The Itemized Deductions menu lists each Schedule A area: Medical and Dental Expenses, Mortgage Interest and Expenses, Taxes You Paid, Gifts to Charity, Unreimbursed Employee Business Expense, Job-Related Travel Expenses, Miscellaneous Deductions and Less Common Deductions. Click Begin on the one you need; completed areas show Edit.
Enter real estate taxes and the 1098 interest
Click Begin next to Mortgage Interest and Expenses. Enter the client's non-business real estate taxes when asked, then open the mortgage interest reported on Form 1098.
On Mortgage Interest Reported on 1098, fill in Recipient/Lender's Name, Interest Paid and, if any, Points Paid, then click Continue.
Add more lenders if needed
The Schedule A Interest grid lists each lender and amount. Click Add a Schedule A Interest for another 1098, use the pencil or trash icons to edit or delete, then click Continue to return to the menu.
Enter cash gifts to charity
Click Begin next to Gifts to Charity, then Cash Gifts to Charity. Either enter each donation with its date, or use the override to enter the total.
On Charity Cash Contributions Override, type the full amount in Total Cash Amount Donated and click Continue.
Check other charity options
The Gifts to Charity menu also covers Non-Cash Gifts to Charity, Non-Cash Donations (more than $500), Limitation on Charitable Contributions Deduction, Declaration of Appraiser and Contributions of Motor Vehicles, Boats, and Airplanes. Click Continue when done.
Jump back to any form from the left menu
Each form you complete is attached (paperclip icon) under Deductions in the left menu, for example Itemized Deductions. Click it at any time to return to that form.
- With the higher standard deduction, most clients won't itemize, but Schedule A still matters for some.
- Medical and dental expenses are more involved and are covered in a separate lesson.
- Use the override on cash gifts when the client only knows the year's total.
Lesson 2 of 6 · 3:24
Child Care Credit – 2441
Complete Form 2441 by adding the child care provider and allocating the expenses to each dependent.
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Written instructions
Open Form 2441
Type 2441 (or the form description) into Form Finder and click Go to Form 2441 now. You can also reach it from Child Care Credit on the Credits menu.
Add a child care provider
On F2441 - Child Care Credit - Page 1, under Step 1 - Child Care Providers, click Add a Child Care Provider. Add a separate provider for each place the children attend.
Enter the provider's ID and name
Under Please select if ID Number is a SSN, ITIN, or EIN, choose EIN for a business or SSN/ITIN for an individual (for example, a family member you pay). Enter the Provider's ID Number and Provider's Name.
Enter the address and amount paid
Fill in Address (street number & name), ZIP code, City, town, or post office and State. Enter the total in Amount Paid to Provider for Child Care, including amounts from W-2 Box 10.
Check Check here if provider is Tax Exempt only if the provider is a tax-exempt organization. If you will file a California return, also enter the Provider's Phone Number. Click Continue.
Allocate expenses to each dependent
Under Step 2 - Dependents, click the pencil icon for the dependent. On Form 2441 - Qualifying Dependent Expenses, enter the Amount Paid for that child and click Continue.
With several dependents at the same provider, split the total among them.
Confirm the difference is zero
At the top of Page 1, check that Difference between Total Expenses and Total Amount Paid To Providers shows $0.00. If the totals don't balance, the return risks rejection. Then click Continue to Page 2.
Complete Page 2 only if it applies
F2441 - Child Care Credit - Page 2 covers additional income for a student or disabled spouse and employer-provided benefits (Employer-paid Dependent Care Benefits, Forfeited Employer-paid Benefits). Most returns need nothing here; read the amounts and click Continue.
Review the summary
The Form 2441 - Child Care Credit grid shows Total to Providers, Total for Qualifying Persons, Additions and Benefits. Click Continue; the program calculates the credit if the client qualifies.
- The credit has qualification rules and income phase-outs, so a high-income client may get a reduced credit or none.
- Amounts entered on Page 2 are used only to figure this credit and are not added to the client's income.
Lesson 3 of 6 · 2:47
8863 – 1098-T – Education Credit
Enter a client's Form 1098-T on Form 8863 and let the program pick the best education credit.
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Written instructions
Open Form 8863
Type 1098T or 8863 into Form Finder and open the form. You can also use Education Credits on the Credits menu.
Confirm income is complete
On Form 8863 - Education Credit, answer Have you entered all of your income and adjustments to income? Click Yes only once the income section is finished; the credit calculation depends on it.
Select the eligible student
Choose the student from Select an Eligible Student and click Continue.
Answer the American Opportunity Credit questions
Answer each question with the client:
- Has the Hope Scholarship Credit or American Opportunity Credit already been claimed on 4 prior tax returns?
- Was the student enrolled at least half-time?
- Did the student complete the first 4 years of post-secondary education?
- Was the student convicted of a felony for possession or distribution of a controlled substance?
Click Continue.
Answer the 1098-T questions
On Form 1098T Question, indicate whether the student received a Form 1098-T and answer the follow-up question, then continue.
Add the institution
On Form 8863 - Add an Institution, enter the school's Name, Address (street number & name), ZIP code, City, town, or post office, State, and the Institution's Federal Identification Number (from Form 1098-T). Click Continue.
Review institutions and enter expenses
The Form 8863 - Institutions list shows each school; use Add Another Institution or the pencil icon to edit. Click Continue and enter the amount paid for the student's education.
Accept or override the recommended credit
The program shows which credit the client qualifies for, such as the American Opportunity Credit, chosen to maximize the refund. Click Continue to accept it.
If you believe it's wrong, click Click here to open Form 8863 - Override Credit and choose American Opportunity, Lifetime Learning or Tuition and Fees Deduction. Overriding may change the outcome of the return.
- Let the program choose the credit; when the inputs are correct, its selection is almost always right.
- Don't guess on the eligibility questions—confirm the answers with the client.
Lesson 4 of 6 · 3:00
1095-A – Healthcare Reporting
Use the Health Insurance wizard to report Marketplace coverage and Form 1095-A amounts.
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Written instructions
Open the Health Insurance section
Click Health Insurance in the left menu. The Health Insurance Questionnaire works as a wizard, asking questions and prompting you based on each answer.
Answer the Marketplace question
Answer Did you, your spouse, or a dependent purchase health insurance via HealthCare.gov or a State Marketplace?
- Choose No and click Continue to finish the section.
- Choose Yes if anyone had Marketplace coverage and received Form 1095-A.
Verify household members
On Verify Your Household Members, confirm everyone listed. Use the links for unusual cases: Add a New Household Member for family who are neither spouse nor dependent, click here to go to Personal Information to add or remove dependents, and the override link to change the calculated tax family size. Click Continue.
Answer the APTC questions
On Advanced Premium Tax Credit (1095-A), answer Are you required to repay all of the APTC received? In most cases the answer is No. Then answer the household income question about the Federal poverty line.
Enter annual amounts when coverage was uniform
If Do all Forms 1095-A include coverage for January through December, with no changes in monthly amounts? is Yes, enter the three annual figures: Premium Amount (Form 1095-A, line 33A), Annual Premium Amount of SLCSP (Form 1095-A, line 33B) and Annual Advance Payment of PTC (Form 1095-A, line 33C).
Enter monthly amounts when coverage changed
If the answer is No, a monthly grid appears. For each month, enter the Monthly Premium Amount (Part III, Column A), Monthly Premium Amount of SLCSP (Column B) and Monthly Advance Payment of PTC (Column C) from the 1095-A. Click Continue.
Finish the wizard
When the section is complete you move on to Your Federal Return is Complete. To revisit health coverage, click Health Insurance in the left menu.
- There is no longer a penalty for having no coverage, but advance premium tax credit received through the Marketplace must still be reconciled.
- Copy the 1095-A amounts exactly; the monthly grid means up to 36 entries, so use the annual option whenever coverage was the same all year.
Lesson 5 of 6 · 1:29
First Time Home Buyer Credit – 5405
Enter Form 5405 so the program calculates the client's First-Time Homebuyer Credit repayment.
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Written instructions
Open Form 5405
Start typing first in Form Finder, or go to Other Taxes and click Begin next to Repayment of First-Time Homebuyer Credit (reported on Form 5405).
Select the taxpayer and residence status
On Form 5405 - First-Time Homebuyer Credit and Repayment, choose who the form belongs to under Form belongs to and answer Did the home stop being your primary residence during the current year?
Married Filing Joint returns need two separate 5405 forms, each with its own repayment amounts.
Enter credit and prior repayments
Under Repayment of Credit, check Check here if you purchased your home in 2008 if it applies. Enter the credit amount claimed and the amount already repaid on prior-year returns.
On a joint return, enter only this spouse's half of each amount, as the on-screen note explains.
Let the program calculate the repayment
Leave the override field blank; the program calculates the required repayment automatically. Click Continue and watch the federal refund in the Refund Summary drop by the repayment amount.
Review the Form 5405 list
The grid shows Belongs To, Prior Year Credit and Prior Year Repayment. Use Add a Form 5405 - First-Time Homebuyer Credit and Repayment for the spouse's form, then click Continue.
- Use the on-screen Click here link to visit the IRS First Time Homebuyer credit account look-up tool if the client doesn't know the amounts.
Lesson 6 of 6 · 3:59
8867 – Due Diligence
Complete the Form 8867 Due Diligence Checklist that appears as you close out a return claiming credits.
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Written instructions
Continue to the summary
After the last section, on Your Federal Return is Complete, click Add State Return(s) if a state return is needed, or Continue to Summary.
Review the Tax Return Summary
Tax Return Summary opens in 1040 View. Toggle to Summary View to see totals by schedule with show details links, which many preparers find easier than paging through schedules.
For a returning client, click Prior Year Comparison to compare with last year without switching years.
Continue to the validation checks
Click Continue. The program runs verification checks and, if the return claims credits that require due diligence, automatically opens the Due Diligence Checklist.
Answer each question with the taxpayer
Read every question to the taxpayer and mark their actual answer, working through Qualifying Information, each qualifying child, EIC Questions and Child Tax Credit Questions.
Where asked, list the documents you relied on, and answer the final certification that all answers are true, correct and complete.
Use the on-page guidance
Read the information boxes when needed, for example the TIEBREAKER RULES for a child who qualifies for more than one person, and the closing note on due diligence requirements and the records you must keep. Click Continue.
Check the results
Form 8867 - Due Diligence Checklist shows each area (Due Diligence for All Credits Claimed, Due Diligence for EIC, Due Diligence for Child Tax Credit, Credit Eligibility Certification and so on). Green means answered; red means the taxpayer may not qualify, with possible reasons listed. Use Make Changes to revise, or Continue.
Open Form 8867 manually if needed
You can also open Form 8867 from the Credits menu (EIC Check-list) instead of waiting for the automatic prompt at close-out.
- The questions can't be pre-filled; you must ask each taxpayer and record their answers, since pre-populated answers create audit and penalty exposure.
- The on-screen notice warns of a penalty for each credit claimed without meeting the due diligence requirements.