Delayed employer tuition reimbursement

Scenario - tuition, books and fees are paid out of pocket. The employer reimburses half of tuition only (no books or fees) after you complete a course and the other half 2 years later IF you are still employed there and IF funds are available in the budget.

So for 2019, tuition paid was $3,000 and $1,500 was reimbursed that year. The other $1,500 MIGHT be reimbursed in 2021. For the AOC, I know books and fees may be applied. How is the reimbursement treated? Do you claim $1,500 as reimbursement or $3,000?

posted

You have a choice (actually a tax loop hole). You can claim nothing on your 2019 tax return, since it will be reimbursed fully in 2021. Or, you can claim a tuition credit, because you are out-of-pocket.

You'll then have to report the 2021 reimbursement as taxable income, on your 2021 return.