600,000 Tax Refunds Are Delayed


It’s becoming increasingly difficult for millions of American consumers to not believe there’s some cosmic force that’s making it difficult for them to move forward when it comes to cash and credit. A six week delay in their tax refunds reiterates that mindset.

In the latest jaw dropping realization, it was announced on Tuesday that hundreds of thousands of taxpayers will likely face an extended period of time for their tax refunds. In most cases, the delays could be as long as six weeks. The reason? Filing errors, according to the IRS. If, though, your return doesn’t include education credits, you should see smooth sailing. That said, there are 6 million tax returns already received that have those credits and it’s believed, so far, that 10% of them are affected.

Won’t Confirm Who Has Issues

The Internal Revenue Service won’t confirm or deny, but there’s at least one tax preparation company – H&R Block – that’s owned up to issues associated with Form 8863, the education credits. Despite those issues, it’s important to know that the IRS changed the way these particular forms are filed in the middle of tax season. That means early filers who completed their taxes before February 22 are the ones who are going to be most frustrated.

If it helps, though, H&R Block says it’s made the changes to its networks, so there shouldn’t be any further delays, at least from this problem. It also said in a presser released on Tuesday that its employees were working diligently to provide assistance to those customers who are affected. It’s working the IRS with the goal of expediting the refund checks. Absent from the press release was any information regarding its fees and possible refunds. It also posted a message on its Facebook page. It reads, in part,

H&R Block has confirmed with the IRS that there was an issue with certain tax returns filed before February 22, 2013 that included certain education tax credits claimed on Form 8863. We have worked with the IRS to expedite a solution to this issue for all of our affected clients.

It also said that while the official turnaround time is between six and eight weeks, it had been told it shouldn’t take that long and that delays that go into six or eight weeks are likely being held up for other reasons.

Slow Start

What makes this even more frustrating is because lawmakers couldn’t prevent the fiscal cliff, many taxpayers were already getting a slow start – which is never good for those anticipating a tax refund. Once those political problems had been addressed (they’ve certainly not been fixed), tax preparers then had to act quickly to ensure they understand those new intricacies. That too resulted in a delay. It wasn’t until mid February that the IRS announced it had made changes that were made necessary by the lack of action on the fiscal cliff.

We have observed instances in which the Form 8863, Education Credits, attached to the Form 1040 and 1040A is not completed correctly. These instances are causing downstream processing delays.

the IRS said.

It provided specifics via two conditions, including Part III of the return on form 8863, lines 25 and 26.

New Legislation

But there was a bright spot with the fiscal cliff, too. The fiscal cliff legislation that was finally enacted Jan. 2, 2013 extended the American Opportunity Tax Credit for another five years, through at least the end of 2017. Further, it’s retroactive, meaning the law extended the tuition and fees deduction, which, as many of us know, had expired at the end of 2011, through 2013.


If that weren’t enough, residents living in Minnesota are becoming increasingly overwhelmed because the state government is cautioning them against using any Intuit services or products. TurboTax is the one Intuit product used for tax filings. The state says its software is wrong and is resulting in tax returns being filed with big errors.

Tax Credits

The education credits are part of the American Opportunity Tax Credit. This is by far the most beneficial for taxpayers who pay tuition for colleges. They’re eligible for a refund of up to $2,500 for every student in the household. There are some requirements and those can be found in the Internal Revenue Service website.

For those who were waiting to file their FAFSA (Free Application for Federal Student Aid) form for college financial aid, the IRS encourages them to do so manually, which will allow their applications to move forward even as their tax refunds are being calculated. Turns out, the Department of Education agrees. It too has recommended manually entering tax return data on the applications. Taxpayers can then complete their online application once their return has been properly processed.

Tax Credit Specifics

Think you might be eligible for the American opportunity tax credit? You could qualify for the maximum annual credit of $2,500 per student. The focus is on the first four years of post-secondary education. The student must be enrolled at least half time. This means that expenses paid for a student who, as of the beginning of the tax year, has already completed the first four years of college do not qualify. Any student with a felony drug conviction also does not qualify.

Tuition, required enrollment fees, books and other required course materials generally qualify. Other expenses, such as room and board, do not. This is an especially important tax credit. As many know, the new financial laws have made it illegal for credit card companies to market their financial products to anyone under the age of 21. The exceptions being the applicant can support himself and if not, he must find a co-signer. The credit equals 100 percent of the first $2,000 spent and 25 percent of the next $2,000. That means the full $2,500 credit may be available to a taxpayer who pays $4,000 or more in qualified expenses for an eligible student.

So how have all of these delays and changes affected you this tax season? Got it figured out or are you taking aspirin every day because of the headaches you’re getting? Share your thoughts with us.


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