repayment of education credit

[ChEAr$]

form 1098-t has a box 4 on it for "adjustments for
prior year", meaning this amount was not eligible
for credit in prior year (2005 in this case).
Instructions in publication 970 speak of using the
amount to refigure the credit for 2005, and using
the difference as a repayment, but on return for
current year (2006). This is like using LSE for
taxing social security where you refigure the tax
in earlier year but include in this year's return.

So publications say to enter the repayment according
to 1040 instructions, and I would expect to see
a line on page 2 of 1040 where you might put
other repayments, you know, like UT, etc? But
nothing in1040 instructions speak of just where
to put it.

Anyone have this come up before? And if so,
where should I put it?

[newtotaxbooks]

TaxBook pg 12-3,12-4:

Repayment of credit should go on line 44, show "ERC" on dotted line. Refunds or reimbursements of other education deductions are treated as recoveries.

[ChEAr$]

Thank ye kindly

for your quick response.

[farm girl]

You may want to

have your client check with the college for an explanation of the Box 4 amount. Just this week I had a client with a 1098-T Box 4 adjustment and when talking to the financial aid office - there were other problems with the 1098-T - I asked if she could tell me what the amount in Box 4 was for and her answer was, "Box 4 reduces the amount in Box 2 due to the unallowed 2005 room and board. Hmm - room and board shouldn't have been on there anyway". It's so hard not to say back, "You think?".