Thursday, November 19, 2009

A government report says more than 314,000 taxpayers made inaccurate claims for a popular tax credit that helps pay college expenses, getting $532 million they weren't entitled to receive.

The Hope Credit provides up to $1,650 to help pay expenses for the first two years of college. The Treasury inspector general for tax administration said the taxpayers claimed the credit for same student for three consecutive years — instead of the two years available— from 2004 to 2006. Of those, 58,000 claimed the credit for a fourth consecutive year in 2007.

The report said the IRS needs better tools to detect and fix inaccurate claims, and the IRS agreed. The problem should ease since Congress has expanded the credit to four years of college in 2009 and 2010.