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Lev
Lev, Tax Advisor
Category: Tax
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Experience:  Taxes, Immigration, Labor Relations
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1098-T, box 4 with a recapture amount listed.

Resolved Question:

1098T, box 4 with a recapture amount listed, for the prior year. How do I handle on this amount on my taxes? My daughter completed one part time year at community college in 2009. She completed 1 part time semester in 2010, enrolled in but withdrew from classes 1 week into the 2nd semester. She did receive pell grants during this time. The recapture box state adjustments for prior year, but it seems to me the recapture should be for this year. I also don’t understand how to calculate the Opportunity Credit with the recapture amount.

Submitted: 5 years ago.
Category: Tax
Expert:  Lev replied 5 years ago.
LEV :

Hi and welcome to Just Answer!

LEV :

If adjustments made for a prior year and reported on the 1099-T - the treatment depends on if that amount (or part of it) was used to claim a credit in a previous year.

If adjustment is related to the grant portion which was not used to claim a credit – that will not affect your current tax return.

For AOC purposes – you need to determine the amount of qualified educational expenses which mainly include tuition (see form 1098-T box 1 and 2 (also verify in the statement your daughter received from the school.)

Then – reduce that amount by tax free funds (such as grants, etc) – that will be the amount to be used for the credit.

Let me know if you need any help or clarification.

JACUSTOMER-h05bcnua- :

Where does a 1099-T come in to play?

LEV :

Sorry for typo - I mean 1098-T. You do not need to send the form 1098-T with your tax return. On that form the school provides you information about tuition expenses and scholarship.

JACUSTOMER-h05bcnua- :

I did not receive a 1099-T from the college, all I have is a1098-T. In box 4, there is an adjustment for a PRIOR year. She completed the prior years (2009) classes. She withdrew from classes in 2010. The examples I am seeing for pub 970 is to recalculate last tax seasons Opportunity credit, but that is not making sense to me as she did not withdraw from classes during that time. It appears to me the credit should apply to 2010 school year, and therefore the 2010 opportunity tax credit. Not sure how to calculate this.

JACUSTOMER-h05bcnua- :

specifically, box 1 = $1099.26 (tuition and related expenses), box 4 = $1138.50 (adjustments for a prior year).

JACUSTOMER-h05bcnua- :

2009 opportunity credit = $638

JACUSTOMER-h05bcnua- :

2009 AOC $383.00 refundable

JACUSTOMER-h05bcnua- :

2009 AOC $255 nonrefundable

JACUSTOMER-h05bcnua- :

using tax act - and there is a entry for the calcuated difference that adjusts this years AOC.

LEV :

Sorry for type - there is no form 1099-T - the only form you should have is 1098-T.

I see that for 2010 the school reported $1099.26 (tuition and related expenses) billed to your daughter.

I am still not clear if you actually paid that amount? Did you provide a check to the school? Did you take a school loan? How that amount was paid?

JACUSTOMER-h05bcnua- :

the amount i paid was $409.26, the rest was pell grants

JACUSTOMER-h05bcnua- :

$78.76 after she withdrew

JACUSTOMER-h05bcnua- :

all for 2010

JACUSTOMER-h05bcnua- :

however, the 1098-t does not list the pell grants, as does my sons college

LEV :

Were she at least half time student?

JACUSTOMER-h05bcnua- :

yes

LEV :

Did you pay for books in additional to $409.26?

JACUSTOMER-h05bcnua- :

yes, around $100 first semester, $250 2nd, but I return the 2nd semester books for a refund

JACUSTOMER-h05bcnua- :

i also made a payment of $198.00 in December 2009, toward 2010 classes, does that get included in 2010?

LEV :

Ok - so my understanding is that you paid out of pocket qualified education expenses for AOC purposes $409.26(tuition) + $100(books) = $509 - that you will use to claim AOC in 2010.

LEV :

$198.00 in December 2009, toward 2010 classes - did you claim that amount in 2009?

JACUSTOMER-h05bcnua- :

no

JACUSTOMER-h05bcnua- :

but, i probably wont claim that 198.00 i like to play it safe

JACUSTOMER-h05bcnua- :

it makes the credit a little less clear, if i just claim playments in 2010, it is undisputeable

JACUSTOMER-h05bcnua- :

probably wont claim the books either, as i dont have a receipt

LEV :

If you did not claim that amount - you may add it to 2010 educational expenses because that for 2010.

JACUSTOMER-h05bcnua- :

my biggest obstacle is how to handle the 1138.50 from a prior year.

LEV :

That is for you to decide - I am only advise on which expenses qualify for the credit.

JACUSTOMER-h05bcnua- :

but that is not my original request

JACUSTOMER-h05bcnua- :

i needed help with the recapture

JACUSTOMER-h05bcnua- :

of 1138.5

LEV :

Can you explain where that amount $1138.50 from a prior year went? Did you get a refund check for that amount?

JACUSTOMER-h05bcnua- :

no, i did not. and, the college will not speak to me because i am not the student

JACUSTOMER-h05bcnua- :

is it possible that they are referring to returned grants because my daughter withdrew from classes

LEV :

Your daughter may talk to the school with you. Also your daughter should have a financial statement that tells exactly where these money go.

JACUSTOMER-h05bcnua- :

no such statement

JACUSTOMER-h05bcnua- :

i know what you are referring to, as my sons college offers that statement in detail

LEV :

If that was a refund - it should go either to you or to the scholarship fund. If the money were refunded to the scholarship fund – there is nothing to worry.

As long as you had out of pocket expenses and you did not receive any refund – you will claim a credit.

JACUSTOMER-h05bcnua- :

that is the anwer i am looking for

LEV :

Most likely - you daughter may login into her account and view the statement.

JACUSTOMER-h05bcnua- :

so, my adjustment should probably be 0

JACUSTOMER-h05bcnua- :

i probably need to talk to the college with my daughter for and request a detailed account of her expenses

JACUSTOMER-h05bcnua- :

my recalcuated credit from a prior year, should be 0

LEV :

Generally - you will support your claim for the credit with your receipts and that you have not received any refund of the money you paid. It would be nice to know exactly where these adjustments went, but as long as you did not receive that amount - I do not think you should reduce your qualified expenses for AOC.

JACUSTOMER-h05bcnua- :

or no change

LEV :

I think you are correct.

JACUSTOMER-h05bcnua- :

thanks.


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