Employee Tuition Remission - is it "Tax Free" employer provided assistance for 2021?

[cheeleah]

Hello, 

I started working at my University for graduate program's employee tuition remission in 2019. 

Since then, I definitely received more than $5250 (tax free amount) in 2020 so the tuition remission I received for 2021 is all taxable income.

Since it's taxable income (I received total of $8,597.50 in taxable fringe benefits and added to my income in W2 I believe), would I say "NO" to the question to "did you receive any of the following tax-free benefits last year?" or still say Yes to that? 

[Hal_Al]

Q. Do I say "NO" to the question to "did you receive any of the following tax-free benefits last year?"

A. Yes, you say No. 

Even though the university is your employer, you do not have "employer assistance", for tax purposes.  Tuition remission is a separate category, for tax purposes,  and is totally tax free (not just the first $5250).  This is even more true, since the school has included the remission amount, as scholarship, in box 5 of the 1098-T. 

The $302 difference between boxes 5 and 1could be considered taxable unless you used for other qualified expenses (books and course materials).

You may not claim a tuition credit, since your tuition was paid by a tax free benefit.

[cheeleah]

Got it, thank you for explaining that. 

I was qualified for Lifetime Learning Credit , does that sound right to you?You mentioned that I may not claim tuition credit ( I already had 4 years of opportunity credit and TurboTax put me on lifetime learning credit). 

Also, wondering if below is the right amount to include below: 

Amount from 2021 Earning statement: 

THANK YOU SO MUCH!

[Hal_Al]

 I did not realize that this "tuition remission" had been reported to you on an "earnings statement" and I assume a W-2 as well.  

In that case you should be eligible for a tuition credit.  But, it's not clear what the $11,182 in box 5 of the 1098-T is and where the $5250 is accounted for and  is the W-2 the only place the $8598 is shown. 

As to your original question. Do I say "NO" to the question to "did you receive any of the following tax-free benefits last year?"

Answer no if the $5250 is already in box 5 of the 1098-T or the box 1 amount was reduced by $5250. You do not report the $8598 a employer assistance because it is taxable income to you.

[cheeleah]

Hello,

hmm that's a great question! The first $5250 should've been deducted already in 2019 and 2020 since my tuition was way over that, and I continued to receive tuition remission in 2021. The amount showing in the pictures are for 2021 only. 

Therefore, anything I received in 2021 should be all taxable income,,, that's why I put that amount included as income. Should I still remove it ?

Also, website says "For graduate programs, the value of your Tuition Remission benefit that exceeds $5,250 is included as taxable earnings on your paycheck and will be subject to tax withholding. Consult your tax adviser for more information on the tax treatment of your education expenses, including IRS requirements." 

[KrisD15]

Was this 8,597.50 reported on a tax form that you entered into the TurboTax program. 

Are you saying that the university added 8,597.50 as wages in Box 1 of your W-2? 

Why does the Earnings Statement show tuition as 13,846.50 (5,249 + 8,597.50) but the 1098-T shows 10,880?

[cheeleah]

Hello, 

No, 8,597.50 was not on my W2, I just saw that on my last biweekly earning statement in 2021. 

W2 Box 1 doesn't really differentiate earning from working at school vs taxable tuition income, but I can tell that it includes the taxable tuition income since Box 1 says I made more than my regular salary. 

And the $5250 was already deducted back in 2019-2020 and shouldn't have been deducted again in 2021. So everything I received for tuition remission in 2021 (what pictures are showing) should be all taxable income.

website says: For graduate programs, the value of your Tuition Remission benefit that exceeds $5,250 is included as taxable earnings on your paycheck and will be subject to tax withholding. Consult your tax adviser for more information on the tax treatment of your education expenses, including IRS requirements.

[Hal_Al]

You say "The first $5250 should've been deducted already in 2019 and 2020".  The $5250 tax free assistance  is for every year. 

You said "No, 8,597.50 was not on my W2, I just saw that on my last biweekly earning statement in 2021. W2 Box 1 doesn't really differentiate earning from working at school vs taxable tuition income". We're only asking you to verify that the $8598  is included (part of) the amount in box 1.  It is almost never identified separately. 

[cheeleah]

Hello,

got it, didn't know that $5250 is deducted every year thank you for confirming that. 

And yes, that $8598 is included as income in Box 1 of my W2. That was obvious to confirm as box 1 on my W2 form was higher than my regular salary