Non-refundable tax credit question?

Non-refundable Tax Credit

Turbo Tax would not make the Lifetime Learning Credit refundable. There is a refundable education credit, the American Opportunity Credit. If you entered the wrong information, you might have tried to claim the wrong credit.

Before you pay all that back, take your tax return and the IRS letter to a professional for review. It may be that you are eligible for some education benefit which will reduce the amount you have to pay back. The IRS will not tell you that you might not owe the entire amount.

There WAS a glitch in 2013 TurboTax software. Even if you answered the questions correctly, the software would default to the lifetime credit instead of the AOC. Review your 2013 return to see it that was the case and if you should have claimed the AOC instead. If so, send an amended return back to the IRS with a copy of the notice. It will take 12 - 16 weeks (at least) for them to reply.

It is your responsibility to know that tax law when you do your own return. If you had, you would know the lifetime credit is not refundable. I used to work for TurboTax and no way would it do that. It was something else and it is usually all taxpayer entry error.

So, when you pull out your copy of your 2013 tax return and look at form 8863, where was the credit entered?

Was it part I (American Opportunity Credit) or part II (Lifetime Learning Credit)? Was part III filled in?

If you see part I and part III, Turbotax is going to rightfully say that you answered the questions wrong and they thought you were eligible.

you entered the information wrong regarding the education credit, the Lifetime credit is NEVER and never has been a refundable credit

TT would not have processed it as such if you had entered the information correctly

you were not eligible for the refundable tuition credit, pay it back as instructed

No you have no recourse, and to be truthful, you obviously did something wrong in TT to have this happen. Did you add in the credit after finishing up on T? It would have filler out the Education Credit form, but would not then have shown it on the 1040.

Were it a glitch in TT software, they would probably pay the penalty and interest. This is very very very unlikely.The first step is to pinpoint exactly where the mistake was made.

The bottom line is that you and you alone are responsible for the accuracy of the return

If there was an unpatched software bug as of the date that you filed the return that caused the error, Intuit will cover the penalties and interest on the tax.

If you entered bad information during the interview -- which is the most common cause of errors -- the entire thing is on you.

No you do not. It is tax preparation software and in the end you are responsible for knowing the details of your tax return.