But how do you actually document this on your tax return? Is there a specific form or worksheet where you list these additional qualified expenses? My tax software doesn't seem to have a place for this.

There's no specific form where you list out these additional expenses. What happens is you (or your tax preparer) calculate the total amount of qualified education expenses, subtract that from your total scholarships/grants, and then only report the excess as income. If you're using tax software, it should ask you about scholarships and qualified expenses separately. You enter the full amount of qualified expenses (including those not on the 1098-T), and it will do the calculation for you. The taxable portion typically gets added to the "Wages, salaries, tips, etc." line on Form 1040 with "SCH" noted next to it to indicate it's scholarship income. If your tax software doesn't specifically ask about additional qualified expenses, you might need to manually adjust the taxable scholarship amount it calculates.

Not OP but my accountant told me the university "should have" included all qualified expenses in Box 1 and refused to believe me when I said they don't. He insisted I could only use what's on the form. Is that just wrong?

Is it really 25-30%? That seems so high! Does that include state taxes too or just federal?

That includes both federal and state, which is why it's on the higher side. Federal self-employment tax alone is 15.3% (that covers Social Security and Medicare - you pay both halves when self-employed), plus your regular income tax rate on top of that. The exact amount depends on your total income and state, but 25-30% is a safe estimate for most people. If you end up setting aside too much, hey - that's a nice little bonus for yourself after filing! Much better than scrambling to find money you've already spent when you realize you owe more than expected.

You're exactly right. Contractor income goes on Schedule C, not as W-2 wages. This is important because Schedule C is where you can deduct your business expenses to reduce your taxable income.

I haven't received any letters yet. I've claimed both kids for the past 3 years, so it's not a new situation. Their mom and I have a formal agreement about who claims which child each year, so there shouldn't be any conflict there. Should I still be checking for mail from the IRS, or would they have contacted me by now if that was the issue?

If you've claimed the same children for multiple years without issues, it's less likely to be a verification problem. However, the IRS sometimes sends letters requesting information 4-6 weeks after filing, so it could still arrive. Mail from the IRS can also sometimes look like regular mail or get lost, so it's always good to check carefully. But honestly, at this point it sounds more like normal processing delays rather than an information request problem. The IRS processing times really have been significantly longer this year for returns with dependents.

The PATH Act is still in effect, but since the original poster filed on March 5th, that wouldn't be causing their delay. The PATH Act prevents the IRS from issuing refunds before mid-February for returns claiming EITC or the Additional Child Tax Credit, but once we're past that date, it shouldn't be a factor anymore.

Thanks for clarifying! I wasn't sure if they had extended those delays or if it was still just the mid-February cutoff. Makes sense that it wouldn't affect March filers.

That's a really good point I hadn't considered. Do you know if these church donations would still "count" somehow even if I take the standard deduction? I'm nowhere near the itemizing threshold since I rent my home and don't have many other deductions.

Unfortunately, if you take the standard deduction, you can't also claim charitable donations. That's one of the trade-offs - it's either the standard deduction OR itemizing all your qualifying expenses (including charitable donations). There was a temporary exception during COVID where people could deduct some charitable contributions even with the standard deduction (up to $300 for individuals or $600 for married filing jointly), but that provision expired after the 2021 tax year. For 2023 and 2024, we're back to the normal rules where charitable donations only help you tax-wise if you're itemizing.

Is that $500 threshold per charity or total for all charities combined? I donated clothes to Goodwill ($300ish), toys to a church program ($200), and furniture to a homeless shelter ($400) last year.

Is there any protection for whistleblowers in cases like this? I'm worried the owner would know exactly who reported him.

The IRS treats whistleblower reports as confidential and won't disclose your identity during their investigation. That said, if you're in a small business where you're the only one who knows certain details, the owner might figure it out anyway. That's why I suggested documenting your concerns in an email first and looking for another job before filing. This creates both a paper trail showing you tried to address it internally and gives you an exit strategy. The Form 3949-A can be filed anonymously if you want, though providing your contact info can help if they need clarification on anything.

Form SS-8 (Determination of Worker Status) can be filed by either the worker or the business, but in practice, it's usually filed by workers who believe they've been misclassified. As a manager without ownership, I wouldn't recommend you file these on behalf of others. If workers file SS-8 forms and the IRS determines they were misclassified, the business will need to pay both the employer and employee portions of FICA taxes (the employees can file Form 8919 to only pay their portion of FICA instead of self-employment tax).