Tax Returns with Education Credit on Hold

Courtesy of the IRS

[See TaxMama note below]

The IRS announced on Monday that taxpayers filing Form 8863, to claim the American Opportunity Tax Credit or the Lifetime Learning Credit can begin filing by the middle of February after the IRS updates its processing systems. The delayed start will have no impact on taxpayers claiming other education-related tax benefits, such as the tuition and fees deduction and the student loan interest deduction.

Filers who need to attach Form 8863 used to claim the American Opportunity Tax Credit and the Lifetime Learning Credit to their tax return can prepare their return now but must wait to submit it in mid-February. This applies to paper and electronically filed Forms 8863.

As you guide taxpayers through the available education credits and deductions, in person or through the tax preparation software you use, please be sure to hold returns for those taxpayers who would benefit the most from waiting and filing the Form 8863, even though some taxpayers may be in a hurry to get a refund. Remember, taxpayers filing an amended return to claim an additional refund must wait until they’ve received their original refunds. Also, keep in mind that an amended tax return cannot be filed electronically and normal processing time for Form 1040X is eight to 12 weeks from the IRS receipt date. We want taxpayers to claim the combination of education credits and deductions that is most advantageous to them.

Updated information will be posted on as it becomes available.


[TaxMama Note: A taxpayer asked if she could file returns for her education credit clients now and amend later to get the Credit?
TaxMama says, Yes
a) If you are not charging them for the service and you are doing it eliminate your backlog of work.
b) Do it if the client demands the earlier filing because s/he desperately needs the first part of the refund – for whatever reason. ]

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