Audit AOC

[Ar_taxpayer]

I was audited for an honest mistake.  I paid the $2500 back with interest.  now realized i should have still been able to get a deduction for the tuition and the amount owed should have been less by $460 i would have gotten from deductions.  if i ammend my return now how do i represent the $2500 paid in the audit.

[DaveF1006]

Actually you will not report this anywhere. You should receive a refund for the the tuition difference thus offset some the amount you have paid the IRS.

[Opus 17 · Accepted solution]

Your tax return has already been adjusted in the IRS system to account for the change you agreed to.  That means that, to file an additional amended return, the base return for that amended return must match the return the IRS has on file, which is not the same as the return you originally filed. 

You will need to purchase Turbotax for the specific year on a CD or as a download to install on your own computer.  Then, you will need to create a return that matches the modified return the IRS has on file.  Presumably, that would be the same return you already filed but without claiming the AOTC.  

However, Turbotax will try to automatically give you the Lifetime Learning credit or the Tuition and Fees deduction, whichever is best if you qualify, and you need to decline that.  You might be able to check the box for "I can be claimed as a dependent by someone else".  Be careful because that might change other things.  Or, try leaving off the 1098-T entirely.  You need to end up with a return that matches what the IRS has on file for you after the audit adjustment.  You can check it against your transcript.

https://www.irs.gov/individuals/get-transcript

Once you have a return that matches your adjusted return, "file" it with the desktop program by agreeing to file and printing a copy.  This will mark it as "filed" in the computer. Then quit, restart, and select that you want to Amend your return.  Add the tuition and you should get the Lifetime Learning Credit or the Tuition and Fees deduction.

You will mail the amended form 1040 with the new paperwork for the deduction or credit, along with a form 1040-X cover sheet that summarizes the changes.  Review everything before you mail it to make sure it all lines up the way you expect. 

[Opus 17]

---

@DaveF1006 wrote:

Actually you will not report this anywhere. You should receive a refund for the the tuition difference thus offset some the amount you have paid the IRS.

---

Hi Dave,

If the taxpayer was audited for improperly claiming the AOC, the IRS will NOT automatically award the Tuition and Fees deduction or the Lifetime Learning credit instead, even if the taxpayer appears to qualify.  (The IRS does not give you any deduction or credit that you don't request in writing on your own tax return, even if it is obvious that you probably qualify.). It was the taxpayer's responsibility to bring it up. 

If the taxpayer here forgot to raise the issue of the Tuition and Fees deduction or the Lifetime Learning credit as an offset at their audit, they will have to try claiming it now with an amended return.