Bucks Blog: Those Claiming Higher Ed Credits Must Wait to File Taxes

Thursday is the official opening of tax filing season, but taxpayers who are claiming certain higher education credits must wait a bit longer.

Those using Form 8863, Education Credits, will have to wait to file until mid-February, the Internal Revenue Agency says, after it finishes updating its systems for processing the form.

The form is used to claim both the American Opportunity Tax Credit and the Lifetime Learning Credit.

The AOTC, as its known, gives families of eligible college students a tax credit of up to $2,500 per year for up to four years; students must be enrolled in a degree program. The credit was extended for five years by Congress in the “fiscal cliff” legislation, formally known as the American Taxpayer Relief Act, passed on Jan. 1.

(The Lifetime Learning Credit offers a credit of up to $2,000; students don’t have to be enrolled in a degree program. This credit wasn’t at risk from the “fiscal cliff,” according to SavingforCollege.com.)

The I.R.S. offered this explanation for the delay in accepting returns using Form 8863: “As it does every year, the I.R.S. reviews and tests its systems in advance of the opening of the tax season to protect taxpayers from processing errors and refund delays. The I.R.S. discovered during testing that programming modifications are needed to accurately process Forms 8863.”

In early January, the I.R.S. said it would have to delay receipt of tax returns until Jan. 30 because of the extensive tax changes passed by Congress in the Taxpayer Relief Act. The agency said it had to update forms and instructions and make adjustments to its processing systems before it could begin accepting returns.

Typically, the agency said, about 3 million tax returns filed through mid-February include Form 8863, or less than a quarter of those filed during the year.

The delay doesn’t affect filers claiming other education-related tax benefits, like the deduction of tuition and fees and the interest on student loans, the I.R.S. said. Those taxpayers may start filing Thursday, with most other taxpayers.

Are you planning on claiming one of the tax credits affected by the delay? How will the delay affect you?

Article source: http://bucks.blogs.nytimes.com/2013/01/29/those-claiming-higher-ed-credits-must-wait-to-file-taxes/?partner=rss&emc=rss