Hi my employer reimburses me for the school tuition but its a taxable income (clubbed into salary income on W2) so in such case can I get the tuition credit?

[nitinjo_2000]

Further, I would like to know what happens if the employer reimburses me next year for this year's tuition?

[Opus 17]

It's somewhat strange that the reimbursement is taxable, since up to $5250 can be a tax-free employee benefit and by reporting it as taxable they are also increasing the amount of their share of FICA and medicare tax that they must pay.

Be that as it may, if your reimbursement is included in your taxable income, then you are eligible for whatever tuition credit or deduction you qualify for, because getting reimbursed with taxable money is basically the same as if they gave you a raise and you paid out of pocket. (which really is what happened.)  It won't matter if you pay in one year and get reimbursed in another year IF the reimbursement is included in your W-2.  Figure the credits based on when you paid.

(It's a different and more complicated story if you get reimbursed tax-free.)

[nitinjo_2000]

Thanks. I guess I will check with my employer as to exactly how much tuition reimbursement they added into my W2.  They may have added the tuition above $5250

[Opus 17]

That could be.  If, for example, your tuition bill was $6000, with $5250 tax-free and $750 added to your W-2, the $750 is what you can use to claim tax credits.

[itsjacson]

You would have to get the paperwork from your school stating how much you paid them and enter it with your itemized deductions

[nitinjo_2000]

I have received form 1098 from my school but my question is since my employer reimburses it (as a taxable income and clubbed in salary income on W2) can i get tuition credit?

[slghtrtrn]

I know this is a few years old, but I'm hoping someone has an accurate answer. What if you pay tuition one year and are reimbursed the following year due to requiring court completion and grade of B or better for reimbursement?

[Hal_Al]

Usually, you may not claim a tuition credit for expenses paid (or reimbursed ) by tax free money (e.g. scholarships, grants, VA benefits or employer reimbursement). Employers are allowed to reimburse employees up to $5250 tax free. Anything over that is taxable and included as taxable income on your W-2. So, any expenses over $5250, including books, may be used to claim a tuition credit.

Q. What if you pay tuition one year and are reimbursed the following year?

A. You have a choice (actually a tax loop hole). You can claim nothing on your 2021 tax return, since it will be reimbursed in 2022. Or, you can claim a tuition credit, because you are out-of-pocket. But then, you have to report the reimbursement from your employer as taxable income on your 2022 tax return.

 It may get a little complicated reporting the 2022 reimbursement  next year. It's best explained by example. Lets say you paid $6000 in tuition, in 2021, and use $4000 of that to claim the tuition credit ($4000 is all you need to get the maximum amount of credit on the American Opportunity Credit).

In 2022 you employer reimburses you $6000. On your 2022 W-2 (received in Jan 2023), he shows $5250 (the maximum allowed) of tax free educational reimbursement and $750 of taxable reimbursement. $750 will have already been included  in box 1 of your W-2 as taxable income. You now have to report $3250 (4000-750) as additional taxable income on your 2022 return. $3250 goes on line 8z of schedule 1 as "Taxable Reimbursement". TurboTax can not automatically pull that from your w-2. You have to enter it manually. In TurboTax enter at::

Federal Taxes Tab

Wages and income

Scroll down to:

--less common income

---Misc Income, 1099-A, 1099-C..... (Press start)

----On the next screen, select Other reportable income

-----Two screens in, type Tuition reimbursement  and $3250

Alternatively (using the numbers in the example), you can use only $750 to claim the tuition credit in 2021. Then, you will have to do nothing with your 2022 return.