Education Credit Audit 2026: Form 1098-T Box 4 & The "Recapture" Trap скачать в хорошем качестве

Education Credit Audit 2026: Form 1098-T Box 4 & The "Recapture" Trap

You paid for your child's spring semester tuition in December to claim the tax credit. In January, they dropped a class and the school sent you a refund check. You deposit the check and move on. You are wrong. You just walked into the "Recapture Trap." The IRS computer automatically matches that refund to your prior year's tax credit using Form 1098-T Box 4. If you don't voluntarily pay back that portion of the credit on your current return using the specific "ECR" code, you will receive an automated audit letter. As The Finance Observer, I’ve performed a forensic review of IRC Section 25A(i) and the specific 5-Step Protocol required to calculate this liability. In this video, we dissect the "Spring Semester Trap," why a "Withdrawal" (W) is safer than a "Drop" for tax purposes, and the specific line on Form 1040 where you must write the magic letters "ECR." FORENSIC BREAKDOWN: 0:00 The "Automated" Audit: Why Box 4 on Form 1098-T triggers an immediate flag 0:24 The "Spring Semester Trap": Prepaying in December vs. Refunding in January 0:48 The Algorithm: The 3 questions the IRS computer asks every return 02:24 The Law: IRC Section 25A(i) (Why this is a "Look-Forward" correction) 03:03 The "Timing" Rule: Why refunds within the same year don't matter 04:33 The Calculation: The 5-Step Protocol to re-figure your prior year credit 05:03 The Math: Original Credit minus Revised Credit = Your Recapture Amount 06:01 The Code: Writing "ECR" on Form 1040 (The secret to stopping the audit) 06:49 The Nuance: Drop vs. Withdraw (Why keeping the tuition bill saves the credit) 07:44 The "Tax Benefit Rule": Why you owe $0 if your original tax liability was zero DISCLAIMER: I am The Finance Observer. This content is for educational purposes only. If you receive a refund of qualified education expenses for which you claimed a tax credit in a prior year, you may need to recapture (repay) some or all of that credit. This is reported on your current year's tax return, typically as an additional tax with the code "ECR." Always consult a qualified CPA.