Educational expense reimbursement

[girigiri]

Hi:

My company provided $7,500 educational reimbursement . In the TurboTax software where it asks for "Employer provided Assistance" should I enter $7,500 or $5,250 (IRS allowed tax free amount) or $2,250 (Difference between $7,500 - $5,250 = $2, 250)?

They have already included the $7,500 in W2 and it was taxed. I actually got $6,691.38 given to me after taxes withheld,

Regards,

Giri

Regards,

Giri 

[Vanessa A]

If the entire amount was included in box 1 of your W2 as taxable federal wages, then you would not include any of it as Employer Provided Assistance.  Since you were taxed on the full amount, it is as though you paid it with your own money instead of tax free money. This means, if you other wise qualify, you are still eligible for education credits for the amount paid. 

[girigiri]

Thank you for your input. The $7,500 is included in W2. Hence, no need to enter anything in the "Employer Provided Assistance" field of Turbotax?

[Vanessa A]

That is correct.  There is no need to enter anything in the Employer Provided Assistance field of TurboTax since it is included in your W2. 

[Hal_Al]

I agree with Vanessa A's answer.  That said, you should verify with your employer that the entire $7500 is in include in box 1 of your W-2.  That is unusual.  If the company has a qualified tuition plan, the first $5250 is income  tax free and not included in your taxable income.  It is subject to social security and medicare tax, so it is usually included in boxes 3 & 5, but not box 1. 

[girigiri]

Hi Hal:

If the company has not included 7,500 in the Box 1 of W2 but only $2,250 (Difference between $7,500 company reimbursement and $5,250 IRS allowed tax free amount), in the TurboTax software where it asks for "Employer provided Assistance" should I enter $2,250 or just $0.?

Let me know your thoughts. 

Regards,

Giri

[Hal_Al]

Q. If the company has not included 7,500 in the Box 1 of W2 but only $2,250 , in the TurboTax software where it asks for "Employer provided Assistance" should I enter $2,250 or just $0.?

A. Neither. You enter $5250 because that's the tax free portion.  Because $5250 of tuition was paid by tax free  aid,  you may not claim  that $5250 (included in box 1 of the 1098-T) for the tuition credit.  This entry is how TT reduces the amount of tuition used  for the credit calculation.

[girigiri]

Thank you Hal. That helped. 😀 

• If the company has not included 7,500 in the Box 1 of W2 but only $2,250 , I will enter $5,250.
• If the company has already included $7,500 in the Box 1 of W2, I will enter $0

Regards,

Giri

[girigiri]

Hi Hal:

I got confirmation today that in W2 Box 1 my employer included only $2,250 which is the difference between the educational reimbursement of 7500 and IRS allowed $5,250. 

Hence, just want to confirm in TurboTax software where it asks for "Employer provided Assistance" I need to enter $5,250?

Again, thank you. 

Regards,

Giri

[Hal_Al · Accepted solution]

Q. In TurboTax software where it asks for "Employer provided Assistance" I need to enter $5,250?

A. Yes.