A friend of mine thinks she may have misreported too much grant money for tuition last year. She didn't get any money this year, but received a tax form indicating 2007-2008 school year having grants issued. Probably was money she got early in last year that didn't apply to this years taxes. She is thinking she included that in last year's taxes. So she may have missed out on possible credits/ deductions for tuition last year because she reported too much grant money, some of which she has to report on this years too.
Is there any way to amend last year's return to correct this, possibly getting additional refund back(ie reduce the amount of grants to the correct amount for that year, potentially allowing tuition related deductions/credits)? Or any other ideas?
She is in a real pickle because when she started work at the job she has held this year for several months, she got marked as exempt from tax in the employer's system, and when she asked why tax wasn't being taken out, she was told repeatedly that it was because she was both a student and an employee of the university. So now she is doing her taxes and has discovered that that was incorrect. Now she has almost + $2,000 owed to the IRS, which she doesn't currently have. From what I understand, filing an extension will still require her to pay this money by the April deadline. I am trying to find anyway to minimize the burden.
Besides these little hurdles, her taxes sound pretty simple. So unless there's a glimmer of hope, I don't see any reason to expend more of her money on getting a tax professional involved.
Any opinions on this?