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How to File an Amended Return to Claim an Education Tax Break

Kimberly Lankford, Contributing Editor, Kiplinger's Personal Finance
The American Opportunity Credit is worth up to $2,500 per student for each of the first four years of college. If you missed taking the credit, you may still be able to claim it by filing an amended return.

[QUESTION]When I was preparing my taxes this year, I realized that I could have qualified to claim the American Opportunity Credit for my daughter's tuition since she started college (she's a senior now). Can I file an amended return to claim the credit, and how many years back can it go?

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[ANSWER]Yes. You generally have until three years after the deadline for filing your original federal tax return to file an amended return if you missed a tax break or need to make other changes. You'll need to submit a separate Form 1040X for each year you're amending. Enter the year you're amending, note the changes you are making, and attach any tax forms that are affected by the change. (In your case, Form 8863 for the American Opportunity Credit; see the link there to the Form 8863 revisions page for the previous years' forms.)

The change could also lower your state income tax liability. File your amended federal return first, get a copy of the transcript of your account from the IRS confirming that you amended your federal return, and then file an amended return with your state, along with a copy of your federal Form 1040X. See the IRS's list of links to each state tax agency.

It can take the IRS up to 16 weeks to process the amended federal return. You can check its status starting three weeks after you file using the Where's My Amended Return? Tool.

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Many families overlook the American Opportunity Credit, which is worth up to $2,500 per student for each of the first four years of college. The credit is based on 100% of the first $2,000 spent on qualified education expenses (tuition and fees), and 25% of the next $2,000 spent on eligible expenses for each year of college. To qualify for the full credit for 2016, your adjusted gross income must have been less than $160,000 if you're married filing jointly or $80,000 if you're single. (You can get a partial credit if your income was less than $180,000 if married or $90,000 if single.)

For more information about amended returns, see IRS Tax Topic Amended Returns. For more information about tax credits and deductions for college, see Tax Breaks for College Costs. Also see IRS Publication 970 Tax Benefits for Education. And for more reasons to amend your return, see The 23 Most-Overlooked Tax Deductions.

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