More return processing delays – Educational Credits Fail IRS Test

Looks like the processing of tax returns in 2013 is going to be a bumpy ride. Those filing for educational tax benefits will experience another delay in the processing of Federal Tax returns.

If your 2012 tax return that will take advantage of some common educational credits, your tax return will not be processed by the IRS until mid-February.  Tax returns that will be affected include any provisions found on Form 8863 and include:

  • The American Opportunity Tax Credit
  • The Lifetime Learning Credit

The delay will not impact tax returns with other educational tax benefits like student loan interest deductions or the higher education tuition and fees deduction.

What you need to know

  1. The IRS testing discovered processing errors with Form 8863, which is causing this additional delay for those who have education credits.
  2. Clients who have these credits often want to file tax returns early for timely submission of their Free Application for Federal Student Aid (FAFSA).  If this is your situation, consider filing your FAFSA application using the “will file” status.  Then go back into the FAFSA form and update the figures as soon as possible.  If this impacts your situation please call.
  3. You should still submit your tax information as soon as it is available.  That way your tax return can be processed as soon as the IRS says it is ready to accept your tax return.
  4. If this impacts you, you are not alone. This delay is expected to impact 3 million tax returns.