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What you need to do with the amount in Box 4 and/or Box 6 of the Form 1098-T Tuition Statement for the current tax year depends on what was claimed on the prior year tax return in regards to the education expenses or scholarship income.

If you claimed an education credit in a prior tax year (i.e. American Opportunity Credit or Lifetime Learning Credit), you need to recalculate that credit, taking into account the adjustment, and then enter the decrease in credit on the current year's return.

To make an entry for the recapture of an education credit claimed in a prior year:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Education in the Federal Quick Q&A Topics menu to expand, then click Recapture of prior year education credits.
  3. Enter the Recapture of prior year education credit amount you have calculated, then click Continue.

This amount is then added to the total tax on Form 1040 U.S. Individual Income Tax Return, Line 16 and you will see the text "ECR" next to this line on your printed copy of the return per IRS Instructions for Form 1040 and 1040-SR, on page 31.

Note. The amount of the credit recapture is NOT the adjustment amount from the Form 1098-T. Rather it is the difference between the credit as it was originally calculated and the recalculated credit amount once the adjustment has been made to the tuition expense on the prior year return. You may find it helpful to review a copy of your prior year's Form 8863 Education Credits (American Opportunity and Lifetime Learning Credits) and then fill out a revised copy using updated figures. Click the link in the previous sentence to print a blank form from the IRS website to assist you in this process.

If you instead claimed a tuition deduction in the prior year (i.e. Tuition and Fees Deduction), you will need to add the adjustment amount to your taxable income on IRS Schedule 1 (Form 1040), Additional Income and Adjustments to Income, Line 8.

To report the adjustment as Other Income:

  1. From within your TaxAct return (Online or Desktop), click Federal. On smaller devices, click in the upper left-hand corner, then click Federal.
  2. Click Other Income in the Federal Quick Q&A Topics menu to expand, then click Prizes, awards or other miscellaneous income.
  3. Enter the Recapture of prior year tuition and fees deduction amount you have calculated, then click Continue.

Note that any link in the information above is updated each year automatically and will take you to the most recent version of the document at the time it is accessed.


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