This is considered as an education recapture. It should be reflected in box 4 on your 2019 Form 1098-T
If you claimed an education credit in a prior tax year (i.e. American Opportunity Credit or Lifetime Learning Credit), you need to refigure that credit, taking into account the adjustment, and then enter the decrease in credit on the current year's return.
The original credit minus the refigured credit is the amount that has to be recaptured. The recaptured amount is added to tax in the year the tuition refund was received. The recapture tax is included on Line 44 of Form 1040. (The recapture amount and "ECR" is entered in the space next to line 44.) The original return for the prior year does not change.
If the taxpayer took the tuition and fees deduction, you have to refigure the deduction. The original deduction minus the refigured deduction is the amount to be recaptured. The recaptured amount is added to income in the year the tuition refund was received by entering it on the "Other income" line on Form 1040. The original return for the prior year does not change.
To enter the adjustment in the TurboTax online program, please follow these steps:
- After sign into your account, select Pick up where you left off
- At the right upper corner, in the search box, type in education recapture, then Enter
- Select Jump to education recapture
- Next screen, Any Education Deductions or Credits in 2019? select your answer
- Follow prompts to answer on-screen step by step questions to complete
