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Old 12-23-2016, 10:34 AM
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CP2000- how to verify claimed education credits - for year 2015 tax return

Recently I got a letter from IRS stating that we owe $1850+interest back to
IRS which we got as education credit. The letter also states that"we need to verify the education credits you claimed on form1040A lines 33or44. Higher education institutions can report either amounts you paid for qualified expenses box(1)or they billed (box2) on forms 1098-T. We don't consider amounts they billed you in box2 as a proof of actual expenses you paid. Provide a signed detailed explanation of the amounts you claimed."
I am a graduate student started school on fall2015 . On my 1098T box 1 is empty and box 2 has $13000.so in our tax return we showed $9000 ,because tax preparer said the limit is $10000 . But in 2015 I paid only $5300 , 1098T included the fee for 2016 Jan- April semester. I wasn't aware of these situations, it was the first time we filed education credits . Now what should we do.? It will be greatly appreciated if anyone can suggest anything in this matter... and how much time it will take to get a response from IRS if submitted all documents? Usually will they accept our documents or reject on these types of issues?

Any response is appreciated



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Old 12-23-2016, 01:28 PM
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Recently I got a letter from IRS stating that we owe $1850+interest back to
IRS which we got as education credit. The letter also states that"we need to verify the education credits you claimed on form1040A lines 33or44. Higher education institutions can report either amounts you paid for qualified expenses box(1)or they billed (box2) on forms 1098-T. We don't consider amounts they billed you in box2 as a proof of actual expenses you paid. Provide a signed detailed explanation of the amounts you claimed."
I am a graduate student started school on fall2015 . On my 1098T box 1 is empty and box 2 has $13000.so in our tax return we showed $9000 ,because tax preparer said the limit is $10000 . But in 2015 I paid only $5300 , 1098T included the fee for 2016 Jan- April semester. I wasn't aware of these situations, it was the first time we filed education credits . Now what should we do.? ========>the limit is $10K Which limit?? College can report using either box 1 or 2.Credit is figured on amounts actually paid in 2015. The 1098-T form is informational only and should not be considered as tax advice. It serves to alert students that they may be eligible for federal income tax education credits such as the Lifetime Learning Credit and the AOC Credit as part of their Federal Income Tax Return. The IRS instructs institutions to report either payments received (Box 1) or amounts billed for qualified tuition and related expenses (Box 2) on the 1098-T.. The school reports qualified tuition and related expenses that were billed during the tax year ( Box 2 ); therefore, Box 1 will be blank.you may claim an education tax credit only with respect to qualified tuition and related expenses paid (not billed) during the calendar year; Not necessarily ,the "Amounts Billed" figures in Box 2 of your 1098T equal the "Qualified Expenses" you can claim on your IRS Form 8863 as you file your taxes. Box 2 shows the amount billed and there will be a check in box 7 if you paid in 2013 for 2014 classes.Money paid or billed in the current year plus those payments or billings for classes starting the first three months of the next calendar year, can be used to claim the edu Credit.

So, you can't claim 2016 expenses for 2015, unless those expenses for 2016 were for January through March classes and billed in 2015.







It will be greatly appreciated if anyone can suggest anything in this matter... and how much time it will take to get a response from IRS if submitted all documents? ============>As mentioned above; you need to understand why you received the CP-2000 and what to do about it. A CP-2000 asks that you review what you filed and determine if it is all correct. You have the option to agree, partially agree, or disagree with the information the IRS has on file for you.If you disagree with the changes the IRS wants to make to your tax return, you need to respond to the CP-2000 by the response date on your notice. Otherwise, the IRS assumes that you agree with the changes. Check the box that states that you disagree or partially agree, and prepare a protest.To protest tax debts under $25K you have the option to make a small case request. To do this, you need to send a letter requesting Appeals consideration and indicate the changes on the CP-2000 you disagree with and what your reasons are. Be ready to back this up with documentation.You may have to go to tax court to appeal changes on a CP-2000. You have the option to represent yourself, but it is not recommended. You can't hire just any tax debt professional to represent you, however. You will need the help of a tax attorney or enrolled agent or a CPA doing taxes. aslongas you agree, you need tyo check the box that indicates that and send it back to the IRS with a check in the amount of what is due on the notice. If you are not able to pay your debt in full, you still need to send back the CP-2000 response with the box checked indicating you agree. There are a number of tax programs that can help you lower your tax debt or take you out of the collections process. A more common and successful solution is entering into an installment agreement. If you do nothing about your tax debt, you will be subject levies, liens, and seizures. You will need the help of a tax attorney or Enrolled Agent (EA)or a CPA doing taxes.

Usually will they accept our documents or reject on these types of issues?==================>>as mentioned above it depends



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Old 12-23-2016, 03:09 PM
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By limit I meant life time learning credit===>$2000 is the max credit allowed under this ,It is 20% of what we spend.That's wat I understand..is that correct? I understand that I got this notice because I mistakenly included 2016 bill amount in 2015 tax return. Still we are eligible for 2015 education credits.IRS is asking for the entire education credits we got. But partially we r correct and partially wrong....what is your suggestion under this condition?



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Old 12-23-2016, 05:25 PM
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Quote:
Originally Posted by AnnMary View Post
By limit I meant life time learning credit===>$2000 is the max credit allowed under this ,It is 20% of what we spend.That's wat I understand..is that correct? I understand that I got this notice because I mistakenly included 2016 bill amount in 2015 tax return. Still we are eligible for 2015 education credits.IRS is asking for the entire education credits we got. But partially we r correct and partially wrong....what is your suggestion under this condition?
By limit I meant life time learning credit===>$2000 is the max credit allowed under this ,It is 20% of what we spend.That's wat I understand..is that correct? =======>>OK I got you correct;as you said, The Lifetime Learning Credit is a tax credit that provides a tax credit of 20% of tuition expenses, with a maximum of $2K in tax credits on the first $10K of college tuition expenses.

I understand that I got this notice because I mistakenly included 2016 bill amount in 2015 tax return. Still we are eligible for 2015 education credits.====>Remember; as mentioned previously, It doesn't matter when the the tuition was billed or what the 1098-T says. What matters is when was the tuition was actually PAID. If the spring 2016 tuition was paid in 2015, it was deductible (or counted toward the ed credit) in 2015.

IRS is asking for the entire education credits we got. But partially we r correct and partially wrong....what is your suggestion under this condition?========> One of the most common IRS notices is CP2000, a notice of proposed adjustment for underpayment / overpayment. It is not a bill. It informs you of the proposed adjustments to credits , deductions or etc. This may result in additional tax owed in your case. A CP2000 notice will show the amounts you reported on your original return, the amounts reported to the IRS by the payer, and the proposed adjustments by the IRS.you ned to review this information carefully to verify its accuracy. CP2000 typically computer-generated and may be erroneous in your case, since you end up owing additional federal taxes after receiving a CP2000, you should consider the possibility that you may also owe additional state and local taxes. In your case I guess you owe taxes to the IRS;however, If you have other tax issues you'd like to discuss with the IRS, send a separate letter.aslongas you agree with CP2000, you usually don't need to reply unless it gives you other instructions or you need to make a payment. Always keep copies of any correspondence with the IRS. You may need to refer to it later.Ignoring an IRS response will not make it go away. Generally, if you receive a notice that you owe additional taxes, the IRS perceives failure to respond as admission of underpayment, starting the collections process.



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