Form 1098-T

[Christian]

A client received a Form 1098-T for a class he signed up for in 2012. Although he registered for the class he later dropped it in the required time and received a full refund of his tuition fee. On the form his tuition fee is reported in box 2. His refund is reported in box 4 as an adjustment for a PRIOR year instead of being reported as a refund of a fee paid in 2012. Basically it's a wash and I will not deduct the tuition expense. What concerns me is their reporting it as an adjustment made for a prior year which may cause problems down the line. Any comments would be appreciated.

[Guest Taxed]

Those 1098-T are often incorrect when it comes to adjustments. I tell my clients to get the actual statement for each semister that falls in a tax year and then we add up the actual tution costs paid in that year plus books and lab material etc. Most colleges have online account where the student can run a statement 1/1 to 12/31 of a year and get every expense paid to the school.

Hopefuly in an audit we will prevail because we are counting tution paid in that tax year.