Hello,
I have a few part question regarding employer tuition reimbursement, W-2 and my tax return:
1. If my employer tuition reimbursement is <=$5,250 I assume it will not show up in box 1 of my W-2?
2. If my employer tuition reimbursement is >$5,250, will only the difference between the actual and $5,250 show up in box 1 of my W-2? Will the employer then withhold taxes out of this difference?
3. On my tax return, I assume I need to report the 1098T that I get from the college? What form is that?
a. Do I report exactly what I paid from the 1098T, or only the difference from what I paid and the $5,250 (if reimbursement was >$5,250)
b. Do I report exactly what I paid from the 1098T, if tuition reimbursement was<=$5,250? Or do I not report the 1098T at all?
Thanks in advance.
Only an amount of education reimbursement greater than $5,250 will be included with wages in Box 1 and tax withheld accordingly. When claiming education credit only your unreimbursed expenses should be reported.
Hi,
Thank you. So to put an example to this. My tuition costs and I paid to the college $13,250. My employer pays 100% of the tuition. $5,250 is exempt, so my understanding is that my W-2 (in box 1) should show an additional $8,000 of income? Correct? And I assume that no taxes have been taken out when I get reimbursed (not sure) of this yet? Correct.
Then for my yearly return, my 1098T for says that I paid the college $13,250. Instead of reporting the full $13,250, I should only report $8,000? or should I report 0$ since the employer paid everything?
Thanks again.
Correct in all of your assumptions. You can use the $8,000 as education expenses for your education credit.
Q. If my employer tuition reimbursement is <=$5,250 I assume it will not show up in box 1 of my W-2?
A. Yes, that is correct. It may show up in box 14, but that's only informational and does not affect your tax return.
Q. If my employer tuition reimbursement is >$5,250, will only the difference between the actual and $5,250 show up in box 1 of my W-2?
A. Yes.
Q. Will the employer then withhold taxes out of this difference?
A. Yes. For tax purposes, it is essentially additional income.
Q. On my tax return, I assume I need to report the 1098T that I get from the college?
A. The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit. If you claim the tuition credit, you do need to report that you got a 1098-T (the TurboTax interview will handle this).
Q. If I claim a tuition credit, what form do I claim it on, on my tax return?
A. Form 8863. TurboTax (TT) will automatically generate that form when you enter the 1098-T and follow the interview. The interview includes a question about employer assistance.
Q. Do I report exactly what I paid from the 1098T, or only the difference from what I paid and the $5,250 (if reimbursement was >$5,250)?
A. You "report" (on form 8863) only the difference. TT handles this.
Q. Do I report exactly what I paid from the 1098T, if tuition reimbursement was<=$5,250? Or do I not report the 1098T at all?
A. You can just not enter the 1098-T, in TT, since you know you are not eligible for a tuition credit.
Q. So to put an example to this. My tuition costs and I paid to the college $13,250. My employer pays 100% of the tuition. $5,250 is exempt, so my understanding is that my W-2 (in box 1) should show an additional $8,000 of income?
A. Correct.
Q. And I assume that no taxes have been taken out when I get reimbursed (not sure) of this yet?
A. No. Employers usually (almost always) withhold income tax, on the difference.
Q. Then for my yearly return, my 1098T for says that I paid the college $13,250. Instead of reporting the full $13,250, I should only report $8,000? or should I report 0$ since the employer paid everything?
A. You report $8000 of net tuition paid, on form 8863, for the education credit. In TT, enter the 1098-T with $13,250 in box 1 and enter $5250 (not $13250) when asked about employer assistance .