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I use TaxAct to prepare my tax return for 2014. I got the warning below.

Warning: Form 1098-T Prior Year Entries

One or more of MySon's 1098-Ts contain entries in box 4 for prior year adjustments. If you have already filed your 2013 tax return and you later receive tax-free education assistance for, or a refund of, an expense you used to figure an education credit or deduction for 2013, you may have to recapture (repay) all or part of that credit or deduction.

To determine whether you need to recapture the credit, you must refigure the credit as if the assistance or refund was received in 2013. Subtract the amount of the refigured credit from the amount of the original credit. The result is the amount that must be recaptured. Any recapture is added to your tax liability for the year in which you receive the assistance or refund. This entry may be accessed in the Education section of the Federal Q&A.

To determine whether you need to recapture the deduction, you must refigure the deduction as if the assistance or refund was received in 2013. Subtract the amount of the refigured deduction from the amount of the original deduction. The result is the amount that must be recaptured. Any recapture is entered on your return as other income. This entry may be accessed in the Other Income section of the Federal Q&A.

Here is my case, my son's community college tuition has been paid by my employer 100% in 2013 and 2014. So in 2013 tax return, I just input tuition fee as 0 for the simplicity . I don't recall clearly whether I claimed the education credit, perhaps not. I claim it for 2014.

I don't understand the meaning. What should I do? I just want a math formula or baby steps.

Edit:

I think that I didn't use it in 2013, see the image. recapture

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You can't claim an education credit for paying the tuition if you did not pay the tuition. If your employer paid it then you did not pay it. You say you don't remember whether you claimed it for 2013, but that is crucial information and you should look into your records to see if you claimed it then. If you claimed the credit for 2013 without actually paying the tuition in 2013, you claimed the credit in error and should file an amended return.

  • Please see my update. I access my 2013 tax report and it seemed that I didn't claim the credit. So can I just skip the warning? – Love Mar 9 '15 at 14:04

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