Amending Fed Return and adding a 1098-T causes change to State...why?

[EGrZ]

Why would adding a missed 1098-T as an Amended Return cause an Underpayment of State taxes when It was an Overpayment originally?

[MayaD]

Can you please clarify which state return are you referring to?

[EGrZ]

Yes, it is Missouri State

[ThomasM125]

It is possible that the form 1098-T reports more scholarship income in box 5 then qualified tuition and related expenses in box 1. In that case, you may have taxable income that is increasing your state income tax, resulting in a tax due.

[EGrZ]

Only 2 boxes on 1098-T have info...#1 has tuition amount and #8 is checked "if at least half-time student"

[EGrZ]

There are no scholarships or grant money involved.  He has used all the American Opportunity Credit available and is getting the Lifetime Learning Credit.  His is a very simple return; just wages under 20,000 and taxes paid out via paychecks accordingly.  His original return had the State of Missouri owing him roughly $16.  If we submit this amendment he will owe them $7.  Nothing wild - I just don't understand it and then I start questioning if the software is working okay.  Is it possible there is a bug?

[AnnetteB6 · Accepted solution]

The Missouri return uses the Federal tax amount as part of its calculation.  It pulls the number from line 22 of Form 1040.  That amount would have changed when you claimed the education credit.  Therefore the Missouri tax would change as well.

@EGrZ