It depends. To qualify, the education assistance must adhere to the following rules:
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The total exemption allowable is $5,250. All educational assistance above this figure will be classified as a fringe benefit and subject to regular taxation.
- Compensation is limited to reimbursement for tuition, fees and school supplies. Other goods, such as meals, lodging and transportation, cannot be covered by a qualified program. Even school supplies cannot be reimbursed if they are not depleted by the course. Textbooks are the exception to this rule, but a computer would not be covered.
- Unnecessary courses involving sports, games or hobbies do not qualify.
- Graduate-level education cannot be covered unless you also take part in a work-study program.
The total exemption cap can be stretched further. Classes that can be directly applied to your job can be qualified as working condition benefits, which are not subject to the $5,250 maximum.
NOTE: If the tuition on the 1098-T is fully reimbursed by your employer you cannot claim the education credit or deduction based on that amount since you technically did not incur any expenses.
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