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Okay--let's say you have a "friend" who was taking a few classes at a community college. These classes were not WIA approved, and were not admitted to on the continued claim form for Unemployment. Then said "friend" receives a 1098-T tax form from the college. (1098-T is for students to be able to deduct qualified tuition and related expenses for school) The info on the 1098-T has also been furnished to the IRS. This info will show that this "friend" has been taking classes whilst collecting UI. Does this mean big trouble from EDD? Will they find out? When the IRS sees this info combined with a tax return stating income from UI, will they share it with EDD? Please help!
Okay--let's say you have a "friend" who was taking a few classes at a community college. These classes were not WIA approved, and were not admitted to on the continued claim form for Unemployment. Then said "friend" receives a 1098-T tax form from the college. (1098-T is for students to be able to deduct qualified tuition and related expenses for school) The info on the 1098-T has also been furnished to the IRS. This info will show that this "friend" has been taking classes whilst collecting UI. Does this mean big trouble from EDD? Will they find out? When the IRS sees this info combined with a tax return stating income from UI, will they share it with EDD? Please help!
Your "friend" should have thought of that before omitting this information on the claim form, or he shouldn't of enrolled in school unless he was willing to give up unemployment. You can't always have the best of both worlds.
I don't know if the IRS will report them or not, but if they find out, you will have to pay it back, plus you could get charged with fraud. I don't know how much that deduction will save your "friend" on their taxes, but they might consider not taking it. But who's to say they won't find out anyway. Definitely not a good situation to be in.
It might depend on which state you're in. In NJ, you can go to school for no more than 6 credits at a time and not have to report it. If that is all you go for, you can say "no" to "have you attended school, etc" on your claim. I called NJ UE myself when I was going to school a while back, to be sure, and this is what I was told. More than 6 credits at a time needs to be approved by UE and at that point you have to answer "yes".
The 1098-T is not to report income, but only to claim extra credits on a tax return if the person chooses to. He/she does NOT have to include it on the tax return if they don't want to bother trying to claim the tax credit. You can find this info on 1098-T's on google that say just this...
Anyway, the 6 credit limit is for NJ, not sure what state you are in. But the 1098-T bit is federal so shouldn't matter what state - it is only if you WANT to try and claim more credit on your return. I left off my 1098-T since it wouldn't get me more credit anyway, took only 6 credits at a time, and IRS or UE has never bothered me, that was for 2009 tax year.
Thank you both for your responses. (FWIW--The "friend" isn't just taking basket weaving, but classes to train in a new field because s/he was woefully under-qualified to contend for a new job.)
Thank you both for your responses. (FWIW--The "friend" isn't just taking basket weaving, but classes to train in a new field because s/he was woefully under-qualified to contend for a new job.)
I think there's a better chance of everything being fine than of it going bad. I really wouldn't worry about it right now! Just let it go and see what happens, it's all one can do at this point.
I am curious about this also. I have a friend in the same situation, taking some classes to try to change careers because he is having trouble finding a job with his current skill set. The 1098T form is a form the educational institution must furnish to the IRS about tuition paid for each individual student enrolled every year. This is different from the 1098E form the school would furnish to my friend. As an individual taxpayer, he would submit the 1098E with his yearly income taxes, if he wanted to claim the amount he'd paid for tuition and get a possible tax refund based on the amount of tuition paid. This is totally optional to do, because the IRS isn't going to force you to try to get money back from them. It's just an option they give if you'd like to take advantage of it. He definitely WOULDN'T do this, since you're not really supposed to take classes while receiving unemployment. So my question is, if he takes the classes, and the school furnishes a 1098T to the IRS, but he does NOT include his 1098E with his income taxes...therefore not alerting the IRS directly that he is enrolled in them... is IRS well organized enough that they would 1) realize, based on the 1098T from the university, that he is also collecting unemployment, and 2) furnish that info to the EDD? From my very rough understanding, it seems that the purpose of the school furnishing the 1098T to the IRS just provides a cross reference point. So in the event that an individual tried to get money back on their tax filings from their 1098E, the IRS could then verify from the 1098T that you are in fact eligible. Or do they actually go through the 1098Ts with a frickin fine toothed come and sync every single record for every person who has a social security number, in which case, they might see that someone also claimed unemployment as their income while simultaneously in school??? Please help.
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