Dumb question on 1098T Box 4

[NECPA in NEBRASKA]

I have a 1098T with an adjustment in box 4. I hae fought with my client for hours over it and she swears that 'everyone' says that she does not have to worry about the fact that she received a scholarship payment in 2019 for 2018 tuition that she had already paid. I am done arguing over this and know that I can't ignore it.  My question is where do I enter the amount on the ATX education expense form or do I just add it to the additional tax line? I found many ways to enter it using other tax software, by Googling it. I am just tired and really done with this return.

Thanks!

[jklcpa]

It's recapture of the prior year credit and reported as an additional tax on the current year's return IF the reduction in the education expenses wasn't know about and already used to reduce the credit on the prior year's return.  It goes on line 12a of the 1040. Sorry I can't tell you how to make your software do that though.  From the 1040 instructions: 

Quote

• Recapture of an education credit. 
You may owe this tax if you claimed an education credit in an earlier year, and either tax-free educational assistance or 
a refund of qualified expenses was received in 2019 for the student. See Form 8863 for more details. Check box 3 and 
enter the amount and “ECR” in the space next to that box.

 

[NECPA in NEBRASKA]

Thanks, Judy. They definitely have to pay it. I did not know anything about it until they brought in the 2019 1098t with the adjustment. I have all of the detailed papers from both years and can see exactly what happened with the scholarship. No matter how many times or different ways I explain it, they still think that they should not have to recapture it. I just made added it to the extra tax line as a line item. I could not find a way to make ATX handle it.