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employer repayment for tuition $11k, how to capture in turbo tax category?

Hello Experts!

 

Need help with employer tuition re-payment category for the amount of $11k.

 

I finished my masters in 2017 and in 2019 left the company, where I paid $11k in re-payment.

 

How to show this repayment in turbo tax software when filing this year?

 

Thank you in advance!

 

 

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1 Reply
Hal_Al
Level 15

employer repayment for tuition $11k, how to capture in turbo tax category?

See below for the general answer on repayments.  Your situation is complicated because employer tuition reimbursement is usually tax free, up to $5500 per year. Note that $11,000 is twice 5500, so it sounds like you got $5500 tax free in two different years. In that case you do not get a deduction or credit for the repayment.  If only part of it was tax free, you claim a repayment deduction or credit for that part.

 

But,  this means that you have now  paid tuition, in those past years, with out-of-pocket, after tax money. If you did not claim a tuition credit, back then, you can file amended returns to do so. You cannot claim a tuition credit on your 2019 return for those past tuition payments. A 2016 amended return must be filed by 4-15-20. You have a year longer to amend 2017. 2015 can no longer be amended.

 

 

Repayments.   This situation is  described in IRS Publication 525. pgs 34-35.  If the amount is more than $3000, you can take a  itemized deduction, on line 16  of schedule A or  you can take a credit. The credit is computed by refiguring the tax return from the previous year as if the income had not been received. Then the difference in tax is claimed as a credit on the current year's return.  In the forms mode (the forms mode is not available in the on-line versions of TurboTax[TT]), you can use the line 74 smart work sheet to enter the credit amount on line 74; select item D, claim of right under IRC 1341 for repayments. TT will  enter "I.R.C.1341" on the line next to box d on line 74 of 2018 form 1040 (schedule 5). TT does not do the credit calculation or compare it to the alternate deduction

 

So, the taxpayer  has the option of either claiming the credit or deducting the repayment as a miscellaneous itemized deduction, whichever provides the greater benefit. But, you cannot file an amended prior year return.

 

If the amount is $3,000 or less, no deduction or credit is allowed. In the past, a miscellaneous itemized deduction, subject to the 2% of AGI threshold, was allowed.  But, all miscellaneous itemized deduction, subject to the 2% of AGI rule go away in 2018. I've seen nothing yet to indicate if there will be an exception for repayments of income

 

 

 

 

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