1098-T

[Sketch201]

I filed my tax return for 2019 and the very next day in the mailbox I got my 1098-T tuition statement. I didn't claim any college expenses in my taxes so I'm not too worried about not filing it. It's hard to keep track of college expenses out of pocket for a year. Box 5 is only $75 more than Box 1. Would it really affect my tax return at all? Would it lower or increase my return enough to bother with it? I also filed 3 W-2s for 2019.

[GiseleD]

Although I cannot see the rest of your return(s) and the dollar amounts therein, I can say that it is always best to file a correct return that includes all tax forms you received. The safest way to approach this is to amend your return. Here's how:

You can amend returns that have been accepted by the IRS. If your return is pending, you won't be able to make any changes until it's accepted or rejected by the IRS. If you don't know your e-file status, we can help you check it. 

• Sign in to TurboTax.
• Scroll down to Your tax return & documents (you may need to select Show), select 2019 and then Amend (change) return. If you only see the option to amend 2018 or earlier, it's because you can't amend an unfiled 2019 return. Instead, just select Pick up where you left off, make your changes, and disregard the rest of these instructions.
• Select Amend using TurboTax Online.
• Carefully follow the instructions. Don't worry if your refund changes to $0. This is normal on amended returns.
• When finished, we'll give you instructions for printing and mailing your amended return, as amendments can't be e-filed.

Three weeks after mailing your amended return, you can start tracking it at the IRS Where's My Amended Return? tracking tool.  Please allow at least 16 weeks for the IRS to process your amended return.

Processing times for amended state returns vary from state to state. If it's been more than 12 weeks since you mailed your amended state return, and you haven't heard anything, we suggest you contact your state tax agency.

[Hal_Al]

The 1098-T is only any informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit or deduction or possibly your student has taxable scholarship income. 

The $75 difference could easily have gone to other qualified expenses, like books.  You don't need to amend. Even if there were no other expenses $75 will make little or no difference.

That said, there  is a tax “loophole” available. The student reports all his scholarship, up to the amount needed to claim the American opportunity credit, as income on his return. That way, the parents  (or himself*, if he is not a dependent) can claim the tuition credit on their return. They can do this because that much tuition was no longer paid by "tax free" scholarship.  You cannot do this if the school’s billing statement specifically shows the scholarships being applied to tuition or if the conditions of the grant are that it be used to pay for qualified expenses.

Using an example: Student has $10,000 in box 5 of the 1098-T and $8000 in box 1. At first glance he/she has $2000 of taxable income and nobody can claim the American opportunity credit. But if she reports $6000 as income on her return, the parents can claim $4000 of qualified expenses on their return.

* A unmarried  student, under age 24, is only eligible for the refundable portion of the American Opportunity Credit if he supports himself by working.  It is usually best if the parent claims that credit.