1098-T Box 4

[lawson]

I received a 1098-T for tax year 2019. It's an adjustment of $47 for the previous year (box 4). All other boxes are blank. Is this amount significant enough to require an amendment for year 2018? How would I know? Thanks!

[DavidS127]

Firstly, it depends on whether the change makes a difference in your 2018 taxes.

If you used TurboTax to prepare your 2018 tax return, you can start an amended tax return and make that change to "tuition paid", and that will tell you how much difference, if any, it makes. Click this link for instructions on how to file an amended return with TurboTax.

Technically, if you owe additional taxes because of that change, you file an amended return.  A decision you have to make is whether an amended return for a change (that is at most $47) is a practical approach versus waiting to see if the IRS makes the adjustment on its own (and sends you a bill).

[Rick23slash]

Hello there,

I have a question and would be grateful if you can provide me with some input. I took the education credit for 2018 tax year, this year I also recieved a 1098-T with quantities on box 1, box 4 and box 5.  Box 1 is more than box 5. Would I need to ammend my 2018 tax return because of an amount in box 4 ($570 is the amount)?

[KrisD15]

If box 4 is an adjustment for 2018, you may need to recapture the credit you received on your 2018 tax year return. 

basically it means this:

Lets say in 2018 you had 4,000 in expenses and used 4,000 in expenses to get the full American Opportunity Tax Credit.  

Now, according to your 2019 1098-T, 570 was adjusted (refunded). 

You would need to calculate the 2018 credit on 3,430 expenses and claim the difference on this years return. (The difference it would have made on your tax liability/refund).

Lets say in 2018 you had 4,570 (or more) in expenses towards the credit, the 570 adjustment won't matter since the credit maxes out with 4,000 expenses. 

According to the IRS:

ACCORDING TO THE IRS:

“Refunds. A refund of qualified education expenses may reduce adjusted qualified education expenses for the tax year or require repayment (recapture) of a credit claimed in an earlier year.”

“Refunds received in 2019. For each student, figure the adjusted qualified education expenses for 2019 by adding all the qualified education expenses for 2019 and subtracting any refunds of those expenses received from the eligible educational institution during 2019.

Refunds received after 2019 but before your income tax return is filed. If anyone receives a refund after 2019 of qualified education expenses paid on behalf of a student in 2019 and the refund is paid before you file an income tax return for 2019, the amount of qualified education expenses for 2019 is reduced by the amount of the refund.

Refunds received after 2019 and after your income tax return is filed. If anyone receives a refund after 2019 of qualified education expenses paid on behalf of a student in 2019 and the refund is paid after you file an income tax return for 2019, you may need to repay some or all of the credit. See Credit recapture next.”

“Credit recapture. If any tax-free educational assistance for the qualified education expenses paid in 2019 or any refund of your qualified education expenses paid in 2019 is received after you file your 2019 income tax return, you must recapture (repay) any excess credit. You do this by refiguring the amount of your adjusted qualified education expenses for 2019 by reducing the expenses by the amount of the refund or tax-free educational assistance. You then refigure your education credit(s) for 2019 and figure the amount by which your 2019 tax liability would have increased if you had claimed the refigured credit(s). Include that amount as an additional tax for the year the refund or tax-free assistance was received.”

TurboTax can help you do this:

Type   recapture education deduction   into the search box located at the top right of the screen

Click on the “Jump to recapture education deduction” link