Form 8863 • IRS blames the problem on fiscal cliff changes.
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Tax filing season officially opened on Wednesday, but early-bird filers applying for college tax credits will have to cool their heels for a couple of weeks before filing claims.
In a news release, the Internal Revenue Service announced that taxpayers won't be able to file Form 8863 until the middle of next month. Form 8863 applies to the American Opportunity Tax Credit and the Lifetime Learning Credit, two tax credits designed to offset the costs of higher education.
Blame the delay on the fiscal cliff.
IRS spokesman Bill Brunson said the tax changes adopted by Congress in early January pushed back the form review process.
"There was a heavy workload," Brunson said. "This form was scheduled to be reviewed, but because of the volume, we didn't have time to complete it all."
The backlog, however, will not hinder filers from pursuing other education-related tax claims, including deductions for tuition and fees as well as student loan interest. Filing for these benefits can start right away.
"We are addressing the issue," Brunson said. "In the future, taxpayers will be able to file [Form 8863]. They just won't be able to file this particular form until mid-February."
Under the American Opportunity Tax Credit, those making less than $80,000 a year (or $160,000 for couples filing jointly) can qualify for a tax credit of up to $2,500 for expenses incurred during the first four years of college, including tuition, fees and books. The Lifetime Learning Credit grants a credit of up to $2,000 for tuition, fees and materials for students, spouses and dependents in college. Both credits are listed on Form 8863, but taxpayers can qualify for only one of the credits at a time. These credits as opposed to deductions decrease how much you may have to pay in income tax.
The IRS estimates the education tax credit delay will affect nearly 3 million U.S. taxpayers who typically file Form 8863 during the first two weeks of tax season. In Utah, 1,188,000 are expected to file tax forms this year.
College tax credits
American Opportunity Tax Credit • Those making less than $80,000 a year (or $160,000 for couples filing jointly) can qualify for a tax credit of up to $2,500 for expenses incurred during the first four years of college, including tuition, fees and books.
Lifetime Learning Credit • It grants a credit of up to $2,000 for tuition, fees and materials for students, spouses and dependents in college.