Claiming LLC on employer paid tuition

[jjtt456]

My wife's grad school tuition is paid by her employer. The value above the standard nontaxable limit is included as wages on her W2 (about $14k). The tuition is paid directly by her employer (which is also the school she is attending) and we have never received a 1098-T. I was previously under the impression that we can't use this  tuition as part of the LLC amount (AOC already used up from undergrad) since we don't get a 1098-T, but looking through forums and at Pub 970 it appears like this additional income should qualify. Am I correct in this thinking? If so, how would I go about including this in our taxes? We don't get any official statements regarding tuition so the only number we have comes from the W2.

[Hal_Al · Accepted solution]

Q.  It appears like this additional income should qualify for claiming the LLC. Am I correct in this thinking?

A.  Yes, Because that $14K was taxed as income (included in box 1 of your W-2), you are considered to be the one who paid that much tuition.

You situation qualifies as an exception to not receiving a 1098-T.  In TurboTax, answer no to did you receive a 1098-T.  Then check the box saying you qualify for an exception.  You will be given a change to enter tuition paid. Just enter the $14K paid (you only need 10K to get the maximum LLC, $2000), with after tax money, and skip the requests for other amounts.

[jjtt456]

Thank you for the information!

So I would just need to have some way of showing that the amount I claim is associated with tuition and that my wife is indeed a student? The paystubs do specify the extra income as tuition over the year.

[Hal_Al]

Q.  So I would just need to have some way of showing that the amount I claim is associated with tuition?

A. Yes and No.  No, because that money was included in your taxable income, it's your money to do with as you please.  It doesn't matter for what  reason your employer paid you that money*.  Yes, you may need to show (if ever audited)  that you paid tuition,  to claim the LLC. So, yes you may need some documentation that you paid tuition.  It appears that maybe you don't have an  tuition statement, as such. 

*The "standard no taxable part" is treated differently. That must be used for tuition to be tax free. 

[jjtt456]

You are correct. We do not see any documentation regarding tuition statements. It's all covered by the employer (which is also the school my wife is attending). The non-taxable portion ($5250) is not included in wages and counted on the W2.

Thanks again for the help.