Hope Education Credit Rules-Stupid Mistake?
Question:
I e-file my taxes each year and use the "Free File" program. In 2005, I used a different program than 2004, but this year Turbotax was offering a better deal so I went back to them.
Because I had used them in the past, they had my 2004 return on file..I was just looking at it and discovered that I claimed the Hope Credit...I totally forgot and claimed it in 2005.
All the tax forms say is that you can't claim both the Hope and Lifetime Learning credits in the same year.but I thought the Hope credit was a one time deal.
Last year I filed my return and it was accepted by the IRS without a problem, so maybe I'm wrong.
Please someone with experience shed some light on this for me! If am wrong, can they hold my refund this year, can be charged fines or go to jail? Thank you
Answer:
Relax, you aren't going to jail, and aren't likely to owe fines. If you did mess up on something like this, the worst that would happen is probably that you'd have to pay back whatever tax benefits you got from the mistake, plus interest.
You might even be fine. The Hope Credit is not a one-time deal - it's good for the first two years of post-secondary education, so if those were your first two years, you don't have a problem at all.
You're right, you can't take both Hope and Lifetime Learning credits in the same year for the same student. A parent with two kids in college, one a freshman and one a junior, might well end up taking both, one for each kid.
You aren't supposed to take Hope and Lifetime credits in the same year. Hope credit can only be taken for two years and must be in your freshman or junior year. Lifetime is a smaller credit taken in your later years of college. You can file a 1040X return and take the credit off. Yes, you'll owe money back but eventually the IRS will catch it. Fix it before they have time to catch it.
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