<p>Thought this was interesting as we often discuss the rules for education credits here. Though “mistakenly” does not seem quite the right term for the situations they are describing!!</p>
<p>When I think of the hours I spend researching the tax credit rules and trying to make sure I am following them correctly. :rolleyes:</p>
<p>I think they meant “fraudulently.” (And my heart dropped for a second when I saw the headline – I too spend hours and hours figuring it out, and my first thought was “OMG I got it wrong?!”)</p>
<p>Yeah, I was kind of salty when I found out I couldn’t claim education credits (I’m in graduate school.) But I don’t want the IRS coming after me in 10 years, so I filed my taxes correctly!</p>
<p>I’ll never understand why the government just hands out money to people based on nothing stronger than their claim, then years down the road figures out that the claim was fraudulent and they shouldn’t have paid. Oops! Oh, well… :o</p>
<p>It happens with the IRS, with Medicare, with FEMA - the list goes on and on. Whatever happened to checking first? If someone has to wait for their money while their claim is being checked, then they have to wait - too bad! For all the money we’re paying out that we shouldn’t, we could afford to hire more oversight workers.</p>
<p>You know…OURS must be the only tax return that the IRS checks every year (no we didn’t make a mistake on the college credits). Every so often we get a love note from them about some error on our return (and we use tax prep software). One would think it would be very easy to send these folks a bill, like we get every so often…and some have been for VERY small amounts of money!</p>
<p>It probably takes the IRS quite a while to match up a person’s tax return to the 1098-T form that the colleges filed. And no 1098-T Form filed means no education tax credit.</p>
<p>During my time as a financial aid officer, I verified thousands of files. I saw so many “mistakes” on tax returns … both married persons file as head of household and nieces/nephews/brothers/sisters/etc claimed as tax exemptions (because their parents don’t file & someone ought to get the tax credit for them, don’t you know) were biggies. We had to play “tax police” way too many times. It’s not just education tax credits that are “mistakenly” taken. And I agree that it’s no mistake in most cases.</p>
<p>(And for those who are wondering, we had to make them file amended returns for the HofH issue. We didn’t for the deductions - the problem there was students wanted to be considered independent due to supposedly having a dependent - but when we checked, we found they couldn’t provide any documentation to that claim)</p>
<p>“It probably takes the IRS quite a while to match up a person’s tax return to the 1098-T form that the colleges filed. And no 1098-T Form filed means no education tax credit.”</p>
<p>The IRS does most (maybe all?) matches via the computer, so it shouldn’t take much time. Most information is submitted to them electronically from schools, corps, etc.</p>
<p>Yes, but that’s not where the fraud was found…</p>
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<p>What I don’t understand is this - only parents can claim the AOTC, not the student right? So the SSN on the 1098-T has to match a dependent’s SSN…seems easy enough to verify with computer matching!</p>
No, a student can claim the credit if they are not claimed as a dependent on the parent tax return. My son claimed it for himself. He was under 24 but not our dependent for tax purposes because he had been working and earned too much. he was still a dependent for FAFSA of course. But he was eligible for the tax credit, including the refundable portion.</p>