IRS not allowing college expenses to be deducted, please help

Forum|Forum|2 years ago
October 16, 2023
1 reply
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Hi there,

Im trying to help my parents with an old tax return from 2019. My sister lived with them most of the year and also filed her own tax return ( Income = $15,657). She was claimed as a dependent that year. We received a letter from the IRS in Aug 2022.

In the letter it Says:

"we didn't allow all or part of the amount claimed as education credits on your tax return. "

- You didn't include the institution's name and EIN number as required on line 22(4).

- You incorrectly computed the credit based on the answers to the questions on lines 23 -26.

Looking at what I submitted, form 8863 on page two has the Schools name and address and EIN correctly stated. My sister started college in 2015 and received the American Opportunity Tax credit 2015 to 2018 so on question 23 I mark yes and then it has me jump to line 31 which is the lifetime learning credit which I believe is just some tuition expense deduction. I have no idea why this is disallowed under the reasons they give above. Perhaps its the money my sister made that year but the two reasons they list above did not outline that as the reason. Maybe the IRS is making a mistake?

TurboTax Home & Biz Windows

Best answer by NCPERSON1

I did file an extension and and paid with a check. I was late in filing the extension like I said in july 2020. Would that count?

@skycamper if you did not file the extension in time, it does not count. The extension had to be submitted no later than July 15, 2020.

https://www.irs.gov/newsroom/taxpayers-should-file-by-july-15-tax-deadline-automatic-extension-to-oct-15-available#:~:text=15.,15.

N

NCPERSON1

@skycamper - AOTC is only permitted for 4 years. So 2019 would have been Year 5, so that part makes sense.

What was on Line 31? was this what was denied?

whose tax return was this form associated with - your parent's or your sister's?

S

skycamperAuthor

Employee

Thanks for responding!! This is on my parents 2019 personal return and the amount on line 31 of form 8863 page 2 is $7895. (educational expenses).

The only clue of what this did to the total tax due was the IRS saying our calculation of $6563 and their calculation was $8142. A difference of $1579. Is this the amount our educational expenses would have saved us had they allowed it?

S

skycamperAuthor

Employee

Looks like yes because $1579 is the amount on line 19 of form 8863 for non-refundable education credits. Im really hoping they made a mistake. Im doing a 1040x and will attach the schools 1098T and IRS letter they sent with an explanation for why we are amending. Coincidentally we are amending part of my dads schedule E as well.