Verifying Claimed Education Credit

Hi all,

I recently received a letter from the IRS informing me that they could not verify my education credits. First some thing about me to help set the situation:

1) I used TurboTax to file

2) I claimed the Lifetime Learning Credit only (I was enrolled full-time in medical school at qualified school)

3) My 1098-T box 1 is blank (the school says they never fill out box 1

4) My 1098-T box 2 is $42,964.50

Verbatim from the IRS letter:

Education Credits

We need to verify the education credits claimed on Form 1040 line(s) 49 and/or 66, or on Form 1040A line(s) 31 and/or 40. Your eligible educational institution did not verify the amount claimed on your tax return, in box 1 of Form(s) 1098-T, Tuitions Statement. Please provide a signed explanation of the amounts paid to support the amount(s) claimed.

Box 1 of my 1098-T is blank (I still have the document in my files) and I was told that this is standard across most schools. TurboTax asked me to enter the number from either box 1 or box 2 onto my tax return.

The IRS is asking me to pay $2,000 (which correlates to the $2,000 credit I received)

Should I just send them a copy of the 1098-T in my possession to clear this up? Or did I actually do something wrong?

Answer : 

1 : As the school left Box 1 blank and you claim it on your tax return, the IRS will not accept it. One reason this happens is that some people pay Spring semester's tuition (Jan - May) in December of the previous year. You need to check your 2012 1098-T to see if they included the amount for Spring 2012 in 2011's amount. In that case, you still cannot claim it, as it would have already showed up on your 2011 tax return.So, they would leave it blank if there was nothing to report, they don't simply decide not to enter anything in that box there would be no point to sending you the 1098 T.

2 : This is common on 1098Ts. If you are using software after you fill out the info from the 1098T it will ask you for "actual expenses paid". You enter what you paid in...Read more..