This is really helpful, thank you. Do you know if there's a limit on the amount of books/supplies that can count toward the American Opportunity Credit? I spent about $1,800 on books and another $1,200 on my laptop.

The American Opportunity Credit is calculated as 100% of the first $2,000 in qualified expenses, then 25% of the next $2,000 - for a maximum credit of $2,500. Your $3,000 in expenses would qualify for the full first $2,000 plus 25% of the remaining $1,000, so $2,250 total credit. Remember that the expenses must be required for enrollment in your courses, which books typically are. For the laptop, you'll need to determine if it was required for your specific program of study or just convenient. If your courses required specific software or computing capabilities, you've got a stronger case for including it.

This is great advice. My university's VITA program actually helped me file for hardship consideration with the IRS too. They had specific experience with scholarship tax issues since they see it every year with students.

That's an interesting point. I'm making about $2,600 per month, so annually that would be around $31,200. That's definitely above the standard deduction, right? So I should be having federal taxes withheld?

At $31,200 annually, you're well above the standard deduction threshold. You should definitely be having federal income tax withheld. Based on that income level for a single person, you'd expect to see roughly $150-200 per month in federal withholding depending on your specific situation. This confirms it's almost certainly an error in how your W4 was processed. Take a new W4 to your payroll department immediately and make sure they understand it needs to be fixed. Consider requesting additional withholding on line 4(c) to make up for what's been missed so far.

This happened to me! HR had checked "exempt" by mistake, and I didn't notice for 3 months. Had to have extra withholding taken out for the rest of the year to catch up.

This is super helpful, thank you! Is it worth trying to handle the initial appeal myself to save on costs, or is that risky? I'm worried about saying something that might hurt my case later.

It depends on your comfort level with tax matters and how complex your situation is. For simple factual disputes where you have clear documentation, you might be able to handle the initial response yourself. However, if there are complex legal interpretations at play or if your business structure has nuances, professional help is advised. The biggest risk of handling it yourself is inadvertently making statements that limit your options later or missing technical arguments that could help your case. If you do go it alone for the initial response, be very careful to stick to provable facts and avoid making legal conclusions or interpretations of tax law.

I paid $3,500 for my tax attorney last year for an appeal similar to what OP is describing. It was a flat fee that covered everything unless it went to Tax Court (which it didn't). Some attorneys charge hourly ($350-500/hr where I live) which can add up fast. Ask for a flat fee if possible!

Do you know if the VITA programs can help with more complicated situations? I'm a grad student but I also have some self-employment income and some stock trades. Would they still be able to help me with the education credits part even if my return is somewhat complex?

Most VITA programs can definitely help with education credits, but they do have limitations on more complex returns. They typically can handle simple self-employment (Schedule C) with income under a certain threshold, but complex business situations or extensive investment transactions might be beyond their scope. Your best bet would be to contact the VITA site at your school and ask about your specific situation. Many will help with the education credit portion even if they can't complete your entire return. Alternatively, they might be able to address each component separately - helping with the education credits while giving you guidance on how to handle the self-employment and investment portions.

Thank you all so much for the incredible advice! I went back into TurboTax and realized I had accidentally marked myself as an undergraduate student instead of graduate. Once I fixed that and re-entered my 1098-T information correctly, the Lifetime Learning Credit appeared! For anyone else having this issue - make sure you've correctly indicated your education level and entered all the 1098-T information exactly as it appears on the form. The box numbers really matter! I was able to get the full credit I was entitled to. Thanks again everyone - this forum is amazing!

I wasn't taking classes, just working those part-time jobs. But this is really good to know! I do have a friend in a similar situation who was actually in school. I'll pass this info along to her. Do you remember which forms specifically you needed to file for past years?

You'll need to file Form 1040 for each year you're filing late. You can download these from the IRS website - make sure you get the correct form for each specific tax year (the forms change slightly year to year). If you're claiming education credits, you'll also need Form 8863. For W-2 income, it's pretty straightforward. Each year's return needs to be mailed separately in its own envelope. If you don't have your old W-2s, you can request wage transcripts from the IRS for free using Form 4506-T or through your online IRS account. Most tax software can also help with prior year returns, though you'll still need to print and mail them.

Yes! This happened to my roommate too. He didn't file for 2022 because he only made about $9,000 that year and thought he didn't need to. Turns out his employer had reported more withholding than was actually taken out, so the IRS system flagged it and sent him a notice. He ended up having to sort out the incorrect W-2 AND file the return.