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Originally Posted by AnnMary By limit I meant life time learning credit===>$2000 is the max credit allowed under this ,It is 20% of what we spend.That's wat I understand..is that correct? I understand that I got this notice because I mistakenly included 2016 bill amount in 2015 tax return. Still we are eligible for 2015 education credits.IRS is asking for the entire education credits we got. But partially we r correct and partially wrong....what is your suggestion under this condition? |
By limit I meant life time learning credit===>$2000 is the max credit allowed under this ,It is 20% of what we spend.That's wat I understand..is that correct? =======>>OK I got you correct;as you said, The Lifetime Learning Credit is a tax credit that provides a tax credit of 20% of tuition expenses, with a maximum of $2K in tax credits on the first $10K of college tuition expenses.
I understand that I got this notice because I mistakenly included 2016 bill amount in 2015 tax return. Still we are eligible for 2015 education credits.====>Remember; as mentioned previously, It doesn't matter when the the tuition was billed or what the 1098-T says. What matters is when was the tuition was actually PAID. If the spring 2016 tuition was paid in 2015, it was deductible (or counted toward the ed credit) in 2015.
IRS is asking for the entire education credits we got. But partially we r correct and partially wrong....what is your suggestion under this condition?========> One of the most common IRS notices is CP2000, a notice of proposed adjustment for underpayment / overpayment. It is not a bill. It informs you of the proposed adjustments to credits , deductions or etc. This may result in additional tax owed in your case. A CP2000 notice will show the amounts you reported on your original return, the amounts reported to the IRS by the payer, and the proposed adjustments by the IRS.you ned to review this information carefully to verify its accuracy. CP2000 typically computer-generated and may be erroneous in your case, since you end up owing additional federal taxes after receiving a CP2000, you should consider the possibility that you may also owe additional state and local taxes. In your case I guess you owe taxes to the IRS;however, If you have other tax issues you'd like to discuss with the IRS, send a separate letter.aslongas you agree with CP2000, you usually don't need to reply unless it gives you other instructions or you need to make a payment. Always keep copies of any correspondence with the IRS. You may need to refer to it later.Ignoring an IRS response will not make it go away. Generally, if you receive a notice that you owe additional taxes, the IRS perceives failure to respond as admission of underpayment, starting the collections process.