There was also confusion about who qualified for the credit, and many people just couldn't figure out all the required paperwork. In fact, the IRS last year received many tax returns that did not claim the credit to which the taxpayer was entitled. The agency began notifying taxpayers about the error and encouraging them to take the credit, which could substantially affect the refund or tax due in the taxpayer's favor. Several educational tax credits are also now available. The Hope credit allows people below certain income levels to claim a credit for the first two years of postsecondary education.
Taxpayers also can tap into their other IRAs to pay for qualified higher education expenses.
The saving grace this year is that there have been no recent simplifications. And with the lingering confusion from last year, it's probably a good thing. Gorka said that's usually where the professional accountants come into play, as they prepare the necessary tax returns and provide a little education on the side. We then try to make sure they understand what they qualify for, and why, and answer any questions they have about it. Once you think you've finally mastered the existing changes, though, don't make the mistake of thinking it will be smooth sailing when tax time rolls around in the future.