Did you receive a letter from the IRS denying your Education Tax Credit? Before you give up on that important tax benefit, take a few minutes to see if perhaps you can reclaim it.
First—did you have your taxes done by H&R Block? They had a little glitch in their tax program early in the tax season. Although most of those tax returns have been fixed, if you had an H&R Block prepared return, make sure you call them and let them know about the problem. They will take care of it. If you cannot reach your local HR Block tax preparer, then call their national number at 1 (800) HRBLOCK. Be patient with the automated answering service. Eventually you will get through to a human being who can help you.
So you got a letter and you didn’t use H&R Block? Well that’s not so surprising. Although Block had all the publicity for their software having a glitch, it turns out they weren’t the only ones. (They were just the biggest and got all the blame.)
Before you write the IRS a check (or accept a smaller refund), take a look at your Education Tax Credit Form (number 8863) and see if it was done correctly. Here’s where I’m finding mistakes:
Question number 23: Has the Hope Scholarship Credit or American opportunity credit been claimed for this student for any 4 prior tax years?
The question means: Have you claimed a Hope or American Opportunity credit 4 times already for this particular student? The way it reads, it seems like it’s asking if you’ve ever claimed it at all in the last 4 years. You want to answer NO (unless of course you’ve already gotten the credit 4 times already.)
Many people have been answering YES. If you say YES, you don’t qualify for the American Opportunity Credit; you only qualify for the Lifetime Learning Credit which is smaller.
What I’ve been seeing is that some programs have let the American Opportunity credit carry through on the 1040 even though the taxpayer said YES. Usually, the software “idiot light” tells you about the error, but not all tax software did that. And the question is so confusing that it’s an easy mistake to make. Once the IRS reviews the returns, they’re catching the YES and sending out letters.
So, if this is your problem, you don’t need to amend your tax return. Just call the IRS at 1 800 829-1040 and talk to someone there. You will be able to fax a corrected form 8863 form to them and they’ll take care of it right away saving you a couple of weeks of waiting.
If you had a different IRS problem with the Education Tax Credit, please post about it. Thanks.