Hello,
I'm in Florida. I will be receiving a 1098-T from school. My work has been reimbursing my tuition throughout the year after I pass the classes. This reimbursement is tied to my W2 income and has been federally taxed. The question is, what do I do with the 1098-T. If I enter the 1098, it will cause me to get a larger refund, wouldn't this be double-dipping and cause an audit?
In that case, you may use the 1098-T to claim a tuition credit. It is not double dipping and will not cause an audit. That money is considered YOUR money, because it is being taxed. For tax credit purposes, you (not your employer) paid the tuition.
That said, it is highly unusual for a company big enough to have a payroll dept. to have a tuition reimbursement program that does not qualify as tax free (up to $5250).
It's a little complicated. There's pre tax reimbursement and after tax reimbursement.
By law your employer can only give you $5250 maximum, tax free. If your tuition was less than that, and you employer reimbursed it all; it’s safe to assume you can not claim a tuition credit. You do not even need to enter your 1098-T. You have nothing to claim.
If you got more than $5250, the amount above $5250 is usually already included in box 1 of your w-2 and you do not need to enter anything additional on your tax return. Since you have essentially paid tax on that part, it is considered your after tax money and that amount can be used to claim the tuition credit.
You say "this reimbursement is tied to my W2 income and has been federally taxed". That's unlikely based on the $5250 rule. You should verify that with your employer.
Bottom line: if you pay tax on the reimbursement, it's considered your money (not reimbursement) and you can claim the tax credit. If a portion is tax free reimbursement, you cannot claim the credit on that portion.
I’m paid salaried on the first of the month. They gave me my W-2 as I won’t be getting another paycheck till 2022 (so it’ll be next tax year). My W-2 came out to be $3239 more than what my actual salary is. When speaking with Payroll, they said it’s because of the “Tuition Reimbursement”, which they added that the whole reimbursement was federally taxed already.
this is a snip right from Payroll
Note that the entire amount of your tuition reimbursement check is subject to income taxes.
Federal and state income tax withholding and Social Security and Medicare taxes (FICA taxes) will be deducted from your tuition reimbursement check. Federal income tax will be withheld at the supplemental income tax withholding rate. The gross amount of your tuition reimbursement check will be included in Box 1 of your Form W-2.
In that case, you may use the 1098-T to claim a tuition credit. It is not double dipping and will not cause an audit. That money is considered YOUR money, because it is being taxed. For tax credit purposes, you (not your employer) paid the tuition.
That said, it is highly unusual for a company big enough to have a payroll dept. to have a tuition reimbursement program that does not qualify as tax free (up to $5250).