In 2011, a report by the Treasury Inspector General for Tax Administration identified 2.1 million taxpayers receiving $3.2 billion in education credits that appear to be erroneous, at least 1.1 million of which (52 percent) had tax returns prepared by a paid tax preparer.
After its release, the IRS disputed the report’s findings suggesting that the majority of cases identified as erroneous stemmed from an inability to match taxpayer filings with data provided by colleges and universities, but agreed to reform it’s procedures.
Fast forward to the present – Beginning with the filing of 2016 tax returns (filed in 2017), taxpayers will be required to have a 1098-T form from the college or university in hand before they claim the American Opportunity tax credit , Lifetime Learning tax credit or deduction for tuition and fees . The idea behind the new requirement is to help the IRS better verify that claims for education credits and deductions are valid.
Stephen Osborne, CPA
Certified Public Accountant