IRS not allowing college expenses to be deducted, please help

[skycamper]

Hi there, 

Im trying to help my parents with an old tax return from 2019.  My sister lived with them most of the year and also filed her own tax return ( Income = $15,657). She was claimed as a dependent that year.  We received a letter from the IRS in Aug 2022.  

In the letter it Says:

"we didn't allow all or part of the amount claimed as education credits on your tax return. "

- You didn't include the institution's name and EIN number as required on line 22(4).

- You incorrectly computed the credit based on the answers to the questions on lines 23 -26.

Looking at what I submitted, form 8863 on page two has the Schools name and address and EIN correctly stated.  My sister started college in 2015 and received the American Opportunity Tax credit 2015 to 2018 so on question 23 I mark yes and then it has me jump to line 31 which is the lifetime learning credit which I believe is just some tuition expense deduction. I have no idea why this is disallowed under the reasons they give above.  Perhaps its the money my sister made that year but the two reasons they list above did not outline that as the reason.  Maybe the IRS is making a mistake?  

[NCperson]

@skycamper - AOTC is only permitted for 4 years.  So 2019 would have been Year 5, so that part makes sense.

What was on Line 31? was this what was denied?

whose tax return was this form associated with - your parent's or your sister's? 

[skycamper]

Thanks for responding!!   This is on my parents 2019 personal return and the amount on line 31 of form 8863 page 2 is $7895.  (educational expenses).

The only clue of what this did to the total tax due was the IRS saying our calculation of $6563 and their calculation was $8142. A difference of $1579.    Is this the amount our educational expenses would have saved us had they allowed it?  

[skycamper]

Looks like yes because $1579 is the amount on line 19 of form 8863 for non-refundable education credits.   Im really hoping they made a mistake.  Im doing a 1040x and will attach the schools 1098T and IRS letter they sent with an explanation for why we are amending.   Coincidentally we are amending part of my dads schedule E as well. 

[NCperson]

@skycamper - assume it was a mistake 

1) here are the eligibiltiy requirements.  Based on what you stated,  you did it correctly.  There are no time limits on LLC so the fact that the AOTC eligibility was exhausted shouldn't have impacted the LLC eligibility.  

https://www.irs.gov/credits-deductions/individuals/llc

2) The credit is 20% of Line 31 or $1579.  And it can be used to reduce Line 18, but the result can not take Line 22 below zero. 

Follow the instructions specifically on the letter. 

You can not amend a 2019 tax return at this point and receive a refund.  There is a 3 year window to claim a refund and for the 2019 tax year that window closed (by law) on July 15, 2023 (unless you requested an automatic refund back then in which case the deadline is Oct 16, 2023 - tomorrow). 

However, if you amend and the result is you owe, then you owe.  that obligation never expires. 

If the letter arrived in August, 2022 why are you just now attempting to amend (and as I stated, it is too late). 

[skycamper]

Shoot!  Thank you for your help!   I filed 2019 sometime after October 31st of 2020.   I had filed an ext in July 2020.  Not sure why,   Weve been overwhelmed with all kinds of problems with accidents, sicknesses, and a home fire,  I just have not made this a priority.  I hope to get all caught up this year.    My dads taxes are always a nightmare and he does not give me the info I need I times to get things done.

Im hoping this is a mistake and I can get it sorted out and get all caught up.

[skycamper]

Oh dear, is it 3 yrs from the date you file or 3 years from the date it was due that you can amend? 

I did find an old text message of me telling my dad I had not yet filed it as of May 2021.   So maybe there is hope that if I get it in by tomorrow I'll be okay. 

[NCperson]

@skycamper  

if you did not file an extension request originally, the deadline has passed  

if you requested the extension originally, then the deadline to file an amendment is today. 

[skycamper]

I did file an extension and and paid with a check. I was late in filing the extension like I said in july 2020.   Would that count? 

[NCperson · Accepted solution]

@skycamper if you did not file the extension in time, it does not count.  The extension had to be submitted no later than July 15, 2020. 

https://www.irs.gov/newsroom/taxpayers-should-file-by-july-15-tax-deadline-automatic-extension-to-oc....

[skycamper]

I wrote the check on July 15, 2020 which usually means I mailed it on that day so it had a postmark. However, I don’t have proof of that. Hopefully I won’t need it.

It will be interesting to see if doing things on the very last day is effective or not, and I’ll update you here when it’s all settled and done!  Thank you very much for guiding me as you were the only one that responded!  Seriously thank you!
abraham