Missing College Tax Credits

Missing College Tax Credits

We’ve seen a lot of excitement over a commonly missed education credit for students that get scholarships and grants. One of our old friends is charging a 40% commission to help you reclaim these missed credits. His work is legitimate and it’s getting a lot of attention. As he says, most CPAs and certainly TurboTax are unaware of how to classify certain types of scholarships or grants as income in order to claim bigger education credits.

This isn’t new and it isn’t a loophole. The IRS even publishes this strategy in Publication 970 (see page 15 – Coordination with Pell grants and other scholarships). The IRS even gives examples of when this could work.

Smith, Kunz includes this assessment in their regular tax return preparation. We charge $34 for this form. Unlike our friend, we also assess the state income tax consequences of this strategy.

We applaud our friend, and others, who really know the law. The major tax prep chains and software do not know how or do not ask sufficient questions to utilize this strategy. However, at Smith, Kunz this is part of your basic tax return – not a gimmick. It’s certainly not something worth 40% of your refund.

This is just another example of why at Smith, Kunz it’s not just about numbers.

Call us today if you’d like us to review a past tax return, or to prepare the current year returns – 208-356-8500.