The Internal Revenue Service has announced that there will be a slight delay in processing individual tax returns claiming education credits. Those returns will begin to be processed by the middle of February.
Specifically, those taxpayers who are affected are those who will file federal form 8863, Education Credits (downloads as a pdf). Those taxpayers can begin filing their tax returns after the IRS updates its processing systems (again, mid-February). That applies to those claiming the American Opportunity Tax Credit and the Lifetime Learning Credit. The IRS estimates that this will affect about three million taxpayers.
The American Opportunity Tax Credit and the Lifetime Learning Credit were affected by the recent tax deal. In particular, the American Opportunity Tax Credit or the “supercharged” Hope Scholarship Credit, which offers a credit of us to $2,500 has been extended through extended through 2017. Income phaseouts – meaning the points at which the credits begin to diminish – were altered for both the American Opportunity Tax Credit and the Lifetime Learning Credit (likely causing most of the delay).
If you’re taking advantage of other education-related tax breaks, including the tuition and fees deduction and the student loan interest deduction, the delay does not apply to you. Those above-the-line deductions are available to taxpayers who plan to file now tax season has opened. This also includes taxpayers who plan to file a federal form 8917,Tuition and Fees Deduction (downloads as a pdf).
We will keep you posted as IRS continues to work out the bugs. Not long now!
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