1098t Box 4 Adjustments

[JenMO]

I have gone back to 2010, took adj off the tuition credit amount and added it to line 60, add'l tax. There isn't a line for this, now the return has to be paper filed. Does this sound correct? Do I need to check with client/school what adj are? Client probably won't know, will the school? What info should be checked into?

[Koss]

Recapture of Education Credit

Information reported on Forms 1098-T is often very inaccurate. Your client may or may not have a recapture. The only way you'll know for sure is by carefully reviewing the student's account statements. You'll need to check the statements for any relevant activity during all of 2010, plus the fourth quarter of 2009 and the first quarter of 2011. You can't rely on the figure in Box 4.

Assuming that there is a recapture that must be reported, it does not belong on line 60.

It gets added to the tax on line 44. Your software may have a way to incorporate the amount into line 44. It may be possible to file the return electronically.

BMK

[JenMO]

THANK YOU, I'll have her check with her school.

[Gary2]

I have gone back to 2010, took adj off the tuition credit amount and added it to line 60, add'l tax. There isn't a line for this, now the return has to be paper filed. Does this sound correct?

It doesn't go on line 60, it goes on line 44 with the notation "ECR". See the instructions for Form 1040, and check with your software to see if there's a way to get it noted correctly.

See the instructions for the 8863 for more info on calculating the recapture.

[KC-CPA]

Education Recapture Credit

I adjusted the education credit in 2010 for an American opportunity credit amount because box 4 on the 2011 1098 T had an amount. I adjusted on line 44 on 2011 return for the amount, the return shows ECR and amount on that line.

IRS processed return and did not adjust for the amount, the refunded the amount without the recapture. Has anybody else had this happen? I use Drake Software and I am trying to figure out why the IRS did not use what I submitted for the ECR adjustment.

Anybody have a similar situation?

[FEDUKE404]

1098-T issues

I adjusted the education credit in 2010 for an American opportunity credit amount because box 4 on the 2011 1098 T had an amount. I adjusted on line 44 on 2011 return for the amount, the return shows ECR and amount on that line.

IRS processed return and did not adjust for the amount, the refunded the amount without the recapture. Has anybody else had this happen? I use Drake Software and I am trying to figure out why the IRS did not use what I submitted for the ECR adjustment.

Anybody have a similar situation?

As others have noted, if you are merely working from a Form 1098-T without bothering to obtain the REAL facts, then you likely have a problem. Using that shortcut route closely supports the old adage GIGO - "garbage in, garbage out."

As for what the IRS did, a recent newsletter I monitor mentioned that the IRS had paid AOC credits to more than 14,000 "college students" under age 10. "IRS vows to do a better job of policing."

FE

[KC-CPA]

Education Recapture Credit

The issue isn't the 1098-T Validation, I validated that prior to putting it on the return, box 4 was actually correct in this case. The issue is when the IRS processed the return they ignored the ERC adjustment that I included on the return.

[JG EA]

Yes, this also happened to me. We tried fighting with the IRS to keep the money. The way I remeber it is the client's didn't want to go to a lot trouble to make them keep his money. Maybe it WAS a software thing.