Amend 07 return to remove HOPE credit, so I can take this year?

[MRPLOW]

Can I amend a T/P's 2007 return to remove the HOPE credit and pay the balance due?
The T/P used up all 4 of his HOPE/AOC years up.
But, only got a $200 benefit in from the HOPE in 2007.

If I remove the HOPE from 2007, the T/P can take the AOC for 2012.
Thereby getting a $1845 tax credit for 2012, minus the $200 that would be owed for 2007, the T/P would be up $1645.

Is this allowed?

[taxea]

First of all it is too late to amend 2007 for this reason even if you could legally do so.

How do you figure he will only owe 200. He will owe penalties and interest for failure to pay from 4/15/07 if the credit was in error. The fact is it isn't in error and he can't take it again.

How do you justify this not being tax fraud? Just because he is willing to pay to take it off doesn't mean it didn't belong there in the first place. I think you should figure what the penalties and interest will be for this length of time before you decide the client will have any gain from this ****-eyed suggestion.

[mastertaxguy]

Education credit-amending to repay earlier credit to get larger credit this year?

Can I amend a T/P's 2007 return to remove the HOPE credit and pay the balance due?
The T/P used up all 4 of his HOPE/AOC years up.
But, only got a $200 benefit in from the HOPE in 2007.

If I remove the HOPE from 2007, the T/P can take the AOC for 2012.
Thereby getting a $1845 tax credit for 2012, minus the $200 that would be owed for 2007, the T/P would be up $1645.

Is this allowed?

Taxea has a point. However, what is proposed is NOT a claim for refund, but an amended return to undo an election and results in a payment, with interest, of the original $200.00 Hope College Credit. I would be inclined to suggest this to the taxpayer, putting the current year on exension, filing the amendment for the prior year (2007), pay the tax with the extension and then file the current year after you receive notice from IRS they are accepting the amendment.

TD 9034 (2002) may offer some general guidance. Also, IRC 25A(e) provides that a taxpayer may elect not to have "this section" apply for any taxable year. Compare this situation with the ability to revoke a foreign earned income exclusion "for any tax year" under Reg. 1.911-7(b)(1) (and yes, Taxea, I am aware that in such a case the TP cannot claim FEI exclusion for the next 6 years but that is a specific statutory provison not found in IRC 25A).

[Bees Knees]

How do you justify this not being tax fraud? Just because he is willing to pay to take it off doesn't mean it didn't belong there in the first place.

taxea - you really should get your facts straight before you falsely accuse someone of tax fraud.

IRC § 25A(e) says:

A taxpayer may elect not to have this section apply with respect to the qualified tuition and related expenses of an individual for any taxable year.

This code section clearly allows a taxpayer to do exactly what you claim is tax fraud. Please attempt to get the facts straight prior to posting answers to tax questions on this message board.

[Nashville]

Ethics goes in both directions

How do you justify this not being tax fraud? Just because he is willing to pay to take it off doesn't mean it didn't belong there in the first place. I think you should figure what the penalties and interest will be for this length of time before you decide the client will have any gain from this ****-eyed suggestion.

I'm not smart enough to know whether this is tax fraud or not.

But I keep reading these implied overtones that ordinary people, well-meaning or not, are subject for tax and governmental authorities to swoop down upon and inflict Draconian suffering on anyone who may have the slightest hint of real or imagined impropriety.

I, for one, wish those who wield this governmental authority were half as honest as the people subject to their kingdoms. Lawmakers who excuse themselves from the very laws they make for the rest of us. Courts who are far more concerned with collecting traffic citation than they are protecting women whose husbands beat the **** out of them. Enforcement personnel excusing amongst themselves those very actions they eschew in public. Red light cameras who target only out-of-state vehicles running stop signs and speeding, but who in the same snapshot are passed by other vehicles bearing state license plates.

Enough beating up the constituency of our society. I wish HALF of this energy and fervor were spent cleaning up the mess we have with these very authorities purported to be worshipped as the Hammer of Thor.

[MRPLOW]

taxea - you really should get your facts straight before you falsely accuse someone of tax fraud.

IRC § 25A(e) says:

This code section clearly allows a taxpayer to do exactly what you claim is tax fraud. Please attempt to get the facts straight prior to posting answers to tax questions on this message board.

Thank you!
This wasn't the clients idea at all, it was mine, and this was done all the time back in the the HOPE credit days of only 2 years, although I had never this scenario where I was amending a return that was over 3 years old, so that was my question. Apparently Taxea has never looked into the possibility of saving clients thousands of dollars.

I would be amending the 2007 return to remove the HOPE credit and change it to the Lifetime learning or tuition deduction.

[FEDUKE404]

The important question

Thank you!
This wasn't the clients idea at all, it was mine, and this was done all the time back in the the HOPE credit days of only 2 years, although I had never this scenario where I was amending a return that was over 3 years old, so that was my question. Apparently Taxea has never looked into the possibility of saving clients thousands of dollars.

I would be amending the 2007 return to remove the HOPE credit and change it to the Lifetime learning or tuition deduction.

I'm trying to keep my head and "behind" low as the rounds fly here....

However, I am curious as to how you can propose amending, for any purpose, a 2007 federal tax return in the spring of 2013 ? ? ?

FE

[Bees Knees]

However, I am curious as to how you can propose amending, for any purpose, a 2007 federal tax return in the spring of 2013 ?

Which of course should be the real issure here.

The instructions for Form 1040X say:

File Form 1040X only after you have filed your original return. Generally, for a credit or refund, you must file Form 1040X within 3 years (including extensions) after the date you filed your original return or within 2 years after the date you paid the tax, whichever is later.

Note that the instructions make this statement in regards to filing an amended return to receive a credit or refund that was not claimed on the original return. I cannot find any instructions that place a time limit for a situation in regards to wanting to increase the tax liability on the original return (of course IRS will always accept more money from a taxpayer).

Unless someone can come up with a code or reg that puts a time limit electing not to claim the credit (I can't find any), it appears to me the strategy may work. Having said that, I think more research would need to be done before trying to replace the Hope credit with the Lifetime Learning credit. To me, that is trying to make a claim for a credit on a return over 3 years old, even if the net result is an increase in tax. You might find that you can only amend to remove the Hope credit, not replace it with a lesser credit.

[ChEAr$]

Just for general information, one may amend a tax return at any time after the filing. No time limits apply.

[FEDUKE404]

Statute of limitations?

Just for general information, one may amend a tax return at any time after the filing. No time limits apply.

Do you have a cite for your stated position?

Note the following:

Possible explanations for delays in processing your amended return

1.Response to a CP 2000 notice. The 1040X will have to be routed to a specialized area to be reviewed and verified as to the specific issue addressed in the CP 2000 notice.
2.If you are currently under bankruptcy protection your amended return will have to be cleared by the bankruptcy area in the IRS before it can be processed.
3.If your tax account has been assigned to a Revenue Officer your amended claim has to be reviewed and approved by the Revenue Officer.
4.If your amended return is appealing or asking for a reconsideration of an IRS decision your claim will undergo a formal, lengthy process.
5.Depending on the issue your claim could be sent to the examination department for additional review.
6.Incomplete claims or unsigned claims will be returned to you requesting the missing information or signature.
7.You should be aware that there is a 3 years statute of limitation expiration. If you file your amended return and we receive it 3 years after the due date of the original return by law we cannot honor your request.

Page Last Reviewed or Updated: 2013-03-17

SOURCE: http://www.irs.gov/Filing/Individual...sked-Questions

[ChEAr$]

Do you have a cite for your stated position?

Dont need to stinkin' cite.

Most people equate filing a 1040x with a claim for refund. However several times in the past a client has discovered an omission of income beyond the three years and decided to amend and come clean.

[MRPLOW]

Do you have a cite for your stated position?

Note the following:

Possible explanations for delays in processing your amended return

1.Response to a CP 2000 notice. The 1040X will have to be routed to a specialized area to be reviewed and verified as to the specific issue addressed in the CP 2000 notice.
2.If you are currently under bankruptcy protection your amended return will have to be cleared by the bankruptcy area in the IRS before it can be processed.
3.If your tax account has been assigned to a Revenue Officer your amended claim has to be reviewed and approved by the Revenue Officer.
4.If your amended return is appealing or asking for a reconsideration of an IRS decision your claim will undergo a formal, lengthy process.
5.Depending on the issue your claim could be sent to the examination department for additional review.
6.Incomplete claims or unsigned claims will be returned to you requesting the missing information or signature.
7.You should be aware that there is a 3 years statute of limitation expiration. If you file your amended return and we receive it 3 years after the due date of the original return by law we cannot honor your request.

Page Last Reviewed or Updated: 2013-03-17

SOURCE: http://www.irs.gov/Filing/Individual...sked-Questions

So if a client realized that in say 2008 they made a mistake and their charitable deductions were only $1000, but they had mistakenly reported $5000 on there return. They would not be allowed to amend the 2008 return and pay the tax due, because it has been more then 3 years?

[FEDUKE404]

Stinkin' cite

Dont need to stinkin' cite.

Most people equate filing a 1040x with a claim for refund. However several times in the past a client has discovered an omission of income beyond the three years and decided to amend and come clean.

Whatever raises your own dinghy to a higher level.

In the meantime, I guess I need to review my personal understanding of "statute of limitations."

FE

[mastertaxguy]

Amended returns time limit(s) if any....lets relax

Do you have a cite for your stated position?

Note the following:

Possible explanations for delays in processing your amended return

1.Response to a CP 2000 notice. The 1040X will have to be routed to a specialized area to be reviewed and verified as to the specific issue addressed in the CP 2000 notice.
2.If you are currently under bankruptcy protection your amended return will have to be cleared by the bankruptcy area in the IRS before it can be processed.
3.If your tax account has been assigned to a Revenue Officer your amended claim has to be reviewed and approved by the Revenue Officer.
4.If your amended return is appealing or asking for a reconsideration of an IRS decision your claim will undergo a formal, lengthy process.
5.Depending on the issue your claim could be sent to the examination department for additional review.
6.Incomplete claims or unsigned claims will be returned to you requesting the missing information or signature.
7.You should be aware that there is a 3 years statute of limitation expiration. If you file your amended return and we receive it 3 years after the due date of the original return by law we cannot honor your request.

Page Last Reviewed or Updated: 2013-03-17
---------------------------------

With all due respect, the "tax topic" instructions on the IRS web page (topic 308) state:

"Generally, to claim a refund, Form 1040X must be filed within 3 years from the due date of your original return or within 2 years from the date you paid the tax, whichever is later. Returns filed before the due date (without regard to extensions) are considered filed on the due date."

Don't get so excited folks: the original question did not deal with a refund claim, but rather, a change resulting in a payment. Then, in 2012, the TP would file and claim the 4th, and final, year of the AOC credit (once the amended return is accepted and processed, and check cashed). CP 2000 notices are less authority that IRS instructions and tax topics.

I know, IRS instructions and advice are NOT substantial authority, but this seems to be all we have to go on.

TP needs to be advised of the risks and potential rewards of this strategy.

It is good to know that so many of us have time on our hands at this stage of the filing season. On further review, maybe that is sad.


SOURCE: http://www.irs.gov/Filing/Individual...sked-Questions

Interesting topic and stategy, though. Wish I had thought of it.

[MRPLOW]

From Form 1040X Instructions. Page 2.

http://www.irs.gov/pub/irs-pdf/i1040x.pdf

"File Form 1040X only after you have filed your original return.
Generally, for a credit or refund, you must file Form 1040X within
3 years (including extensions) after the date you filed your
original return or within 2 years after the date you paid the tax,
whichever is later."

Note it states "for a credit or refund".
Mentions nothing about a time limitation for a balance due...