January 30, 2013
It's that time of the year again. Today marks the beginning of tax season; the day most Americans can submit their returns. Taxpayers who want to claim certain education credits, however, will have to wait a little longer.
As reported by CNNMoney, the Internal Revenue Service announced on Monday that it would be unable to accept Form 8863, which is used to claim both the American Opportunity Tax Credit and the Lifetime Learning Credit. The first credit offers up to $2,500 per student for up to four years of college. The Lifetime Learning Credit provides up to $2,000 a year for education expenses. Unlike the American Opportunity Tax Credit, the Lifetime Learning Credit does not have a limit on the number of years it can be claimed and students do not have to be enrolled in a degree program.
According to WBTV, the delay is due to the fact that the IRS needs to update its systems in order to accurately process Form 8863. Every year, the agency evaluates its systems before the start of the tax season in order to avoid errors in processing and delays in refunds. Taxpayers who wish to claim the education credits using Form 8863 can do so by mid-February. The New York Times noted, however, that this delay should not impact other education-related credits such as the deduction of tuition and fees and the interest on student loans. According to WBTV, these tax benefits are on Form 8917 and the Form 1040 series, respectively.
The submission delay could impact households and small businesses because it may affect when refunds are issued. Tammy Bowers has a daughter who is currently in college and she said the delay would postpone some of her plans.
"…We usually try to prepare our taxes early rather than later, we like to do things to the house with that money," she explained to WBTV.
Likewise, some parents and teachers may have to hold off on buying supplies for their children until they receive their tax refund. As a result, business could be slow for those selling education-related supplies.
According to The New York Times, of the tax returns filed through mid-February, some 3 million include Form 8863, which is less than a quarter of the returns filed during the year.
Compiled by Heidi M. Agustin
Sources:
"Tax returns claiming education credits delayed until mid-February," wbtv.com, January 29, 2013, David Whisenant
"Taxpayers claiming education credits must wait to file," money.cnn.com, January 28, 2013, Blake Ellis
"Those Claiming Higher Ed Credits Must Wait to File Taxes," bucks.blogs.nytimes.com, January 29, 2013, Ann Carrns
