What You Need to Know About the Form 8863 Update

March 04, 2013 : Scott Gamm

Some taxpayers are receiving letters from the IRS informing them their returns are now under further review. Some of these letters are related to the Form 8863 update (Education Credits).

In previous years, H&R Block has transmitted a “Y” for Yes and a blank for No for questions 22-26 on Form 8863. The IRS no longer accepts this format leading these returns to be reviewed further, but without delaying the estimated 21-day refund cycle. Once we learned of this change, we worked to comply with the new IRS process and now are transmitting an “N” for a No answer.

Why did I receive a letter saying my return was under further review?

This year, the IRS changed the way it processes and accepts answers to some ‘Yes’ or ‘No’ questions on Form 8863 as transmitted by H&R Block and other tax preparers. Once we learned of this IRS change, we worked to comply with the new IRS process.

Some taxpayers may receive a CP05 letter saying the return is under review (click here to view the CP05 letter). The IRS has stated that they still intend to process your return within the 21 day refund cycle goal, unless additional information is required. If you receive a CP05 letter, no action is required on your part.

We do apologize for the inconvenience to our clients.

Why does my letter say something about Combat Zone deferment?

The IRS has acknowledged this heading — “Important information about Combat Zone tax deferment” — was printed in error on some CP05 letters, and you should simply ignore the heading. The content in the rest of the CP05 letter still applies.

I received a second letter, CP12C, asking for specific information. What does that mean?

Some taxpayers filing Form 8863 may have received letter CP12C. Letter CP12C is sent out to taxpayers that will need to submit additional information to the IRS regarding their individual return.

If you receive this, you should follow the instructions and provide the information requested as soon as possible, as your return will not finish processing until the IRS receives the information requested. If your return was prepared in an H&R Block retail office, please contact your tax pro to help you.

Your tax refund will be released once the information is reviewed by the IRS and validated.

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Scott Gamm

Guest Contributor

Scott served as family finance advisor for H&R Block Dollars & Sense. Gamm is founder of HelpSaveMyDollars.com, a financial website focused on helping consumers save and learn about money, and author of MORE MONEY, PLEASE: The Financial Secrets You Never Learned in School (Plume/Penguin).