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PDtax, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 4478
Experience:  35 years tax experience, including four years at a Big 4 firm.
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I received a notice from the irs amending my 2011 tax return

Customer Question

I received a notice from the irs amending my 2011 tax return removing my educational credits.I am sure we screwed up on that listing what was charged and not what was paid.I however had a payment from an ira of my moms when she passed that differed from the tax form i have no tax was taken from that.I kind of feel shell shocked here it is 2 years later and boom 3300 dollar bill they want by june 27th i dont have it.Any options here?
Submitted: 4 years ago.
Category: Tax
Expert:  PDtax replied 4 years ago.

PDtax :

Welcome to the site. I will be helping you today, in Q & A format.

Expert:  PDtax replied 4 years ago.
Hi Tom,

Nobody likes those notices. The bad thing is IRS wants some money, and if the changes are correct, Virginia will want some, too. The good thing is you can, and should, review the notice to insure it is correct. First, make any corrections you can to reduce the taxes due, then payment arrangements can be made.

Education credits are more complex than most people realize. The credit is not just based on what was paid. I suggest you consult a tax pro in your area, and/or review the calculations in IRS Pub. 970. It's complex because of the fiscal year reporting at many schools, versus the calendar year for most taxpayers. I just fixed one of these notices for a client, and was able to claim substantial credits due to that issue.

Inherited IRA accounts are taxable, since there was likely a tax benefit received when your Mom contributed. If there is a difference between what your 1099 said was taxable and the IRS position, I would want to know why. Again, a review with a tax pro makes sense here.

Ok, so let's say the pro corrects the IRS notice and you owe $1,500, and that's still too much to pay all at once. First, you have to add the Virginia amended return to report the income to them, and maybe they want an extra $300.

Pay the state bill first, as it is likely manageable. Then, IRS will work with you to allow for formal installment payments on the amended return you file (correcting some of the IRS math) and add Form 9465. On it, you specify how much you want to pay, and when, and for how long. Approval is essentially automatic, and you can even set up direct debit to make the monthly payment.

Thanks for asking at Just Answer/PDtax. Please ask any follow up questions you may have, or leave positive feedback to close out your question.
Customer: replied 4 years ago.

2430 was charged for year 2011 i looked up on ctu website the 1099 form doesnt list what was paid worrying about 2012,s return i noticed 2012 form 1099 doest list what was paid but it is listed on the campus website.I was under the impression it was all dedectable

Expert:  PDtax replied 4 years ago.
Education credits are allowed, essentially for the tuition and fees paid, and are more generous for the first two years of your college education.

The credit is based on tuition paid (box 1 of 1098-T) or 'deemed paid'. The tuition paid amount does not have to match the 1098-T, but you have to support how much you actually paid for the tax year in question.

The bursar's office will have a list of what you actually paid, and you may want that to prove the actual amount. As I found in amending one of these IRS notices for someone else, the timing of the amounts paid can vary greatly from the listing of tuition billed on that form.

Again, since it is involved. I would get the bursar's records, and consult with a pro who can see exactly what was paid, and when, for purposes of the credit.

Thanks again from Just Answer.
Customer: replied 4 years ago.

so billed tuition does not count?

Expert:  PDtax replied 4 years ago.

Generally, no. it's the net amount you paid.


let's say you start school September 2012, and tuition and fees is $5,300. Your financial aid totals $3,400. $1,900 is available for the 2012 credits.


The credits are capped, too, so most people qualify for the maximum.

Customer: replied 4 years ago.

think the cap is 4,000

Expert:  PDtax replied 4 years ago.

yes, and the credit is limited to $4,000 tuition spent, then a 50% credit.


Is there anything else? if not, please rate my answer (it closes out your question and gives me credit for assisting today). Thanks again.