Yes! Read the Letter from the IRS below
Is This For Real? Is it Legal?
If you want to read IRS Supporting Documentation for what we're doing,
check out the helpful explanatory links below.
One of the most common questions students ask us is if they can really get cash back from the IRS- especially if they already received a refund and if they used TurboTax or a professional CPA to prepare their taxes. —They want to know how this can be legal.
If you were a student during any of the past three years and you received some type of grant or scholarship, there’s a decent chance the IRS owes you money. What’s important to understand is that US tax law is over 74,000 pages long and growing. It’s impossible for any person or software to know every aspect of the tax code. As an accounting professor, I learned about rules in the tax code that deal specifically with students. I also realized that most CPA’s and tax software programs didn’t take full advantage of the refunds available to students who receive scholarships and grants.
TurboTax is a great program. I’m sure your CPA is great at what they do. But there’s a chance they aren’t aware of all 74,000 pages of tax law- and that the IRS could owe you money. What we do is properly amend the tax returns for students so they receive the full amount of refund due to them according to the tax code. It is 100% legal and welcomed by the IRS.
Many students we have worked with have over $1,000 dollars per year in unclaimed refunds, and some have received as much as $6,000 dollars over three years. There’s no upfront cost to find out -and you only pay our accounting fee if you decide to file your amended returns and claim your cash! Use our refund calculator to get your instant quote right now and find out how much cash the IRS owes you.
IRS Supporting Documentation
In the What's New section on page 5 of the 1040 Instructions for 2014, the IRS announced a change that most CPAs did not notice. As a result, millions of students with scholarships or grants are missing out on their maximum tax refund. Fixing this error can be challenging and time consuming for students and CPAs, since it often involves obscure and extremely complicated tax laws (especially for students with the earned income credit, the net premium tax credit, and other credits), and since it involves preparing an amended tax return. Here is what the IRS said in those 1040 instructions:
Pell grants and other scholarships or fellowships. Choosing to include otherwise tax-free scholarships or fellowships in your income can increase an education credit and lower your total tax or increase your refund. See the instructions for line 68, the instructions for Form 8863, and Pub. 970 for more information.
Below is an excerpt from a little-known US Treasury (IRS) document, entitled "Students May Be Foregoing Tax Benefits By Mistake." *
For students with scholarships, such as Pell Grants, the process for claiming education-related tax credits, like the American Opportunity Tax Credit (AOTC), is unusually complex and results in many eligible students and parents (if the student is a dependent) foregoing tax credits for which they qualify. The magnitude of the problem appears to be large—the complexity affects at least the almost 9 million students who receive Pell Grants and results in hundreds of millions of dollars of unclaimed credits each year.
Taxpayers may be unaware that they have a choice of how to allocate scholarship funds between QTRE [Qualified Tuition and Related Expenses] and living expenses on their tax return. However, IRS regulations provide that the student may treat scholarship funds to have been used for non-QTRE such as room and board, simply by including the funds in income, as long as the scholarship is allowed to be used for non-QTRE expenses, as is the case with Pell Grants. (See section 1.25A-5(c) of the regulations.)
...[Students have] a choice in how to allocate Pell Grants for tax purposes. Information available to guide taxpayers can currently be found on page 16 of Publication 970.
The tax-minimizing allocation of Pell Grants and other scholarships between QTRE and living expenses depends on a number of factors, including the terms of each scholarship, the amount of scholarships and expenses, the student’s marginal tax rate and income tax available for use against the non-refundable share of AOTC or LLC, and, in the case of tax dependents, the parents’ income tax before AOTC or LLC. The calculation of the optimal strategy is especially complicated because in the case of a dependent student it may depend on two tax returns and because a student’s marginal tax rate may change depending on how much of the scholarship is included in income. The optimal strategy is specific to each student’s situation.
The amount of your refund is affected by your earned income (wages and business income), the number of children you have, your dependent care expenses, your retirement savings contributions, your health care costs, the amount of your taxable income, and several other factors that make the computation of the optimum credit highly complicated. If the credit is computed incorrectly, the IRS may deny the credit and even impose a higher tax. When deciding the most beneficial method for reporting education expenses, students should consult a qualified tax professional who deals excusively with students and is extremely aware of all the nuances in this area of tax law. Most CPAs do not know even know about Section 1.25A-5(c).
* The US Treasury also displays this document at: https://www.treasury.gov/connect/blog/Documents/Pell%20AOTC%204%20pager.pdf
I am Steve Hunt. I am a Certified Public Accountant licensed in the State of Idaho (but I can serve online clients anywhere). I am a Member of the American Institute of CPAs®. My PTIN is P00612152.
The National Association of State Boards of Accountancy (NASBA) provides a website that verifies the credentials of CPAs. Search out my credentials at CPAverify.org. I’m listed as Stephen Hunt. My license number is CP-5841.