Monday, November 23, 2009

College Tax Credit Being Claimed Incorrectly

According to the IRS, over 300,000 taxpayers have incorrectly used the Hope Credit, which is used to offset expenses related to the first two years of a child’s expenses related to college. The credit, which provides up to $1650 each year, was incorrectly claimed in three consecutive years instead of two, costing the federal government $532 million.

The Treasury department has sent a report to Congress that recommends allowing the IRS to be able to fix tax returns that incorrectly claim the credit as well as new reporting requirements to help the IRS match expenses claimed by students with those reported by schools. More can be read here.

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