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GeorgeM777
Employee Tax Expert

How to tell if Employer Provided Tuition Assistance is included in W-2.

You may not have to pay tax on the money you received from your employer which was a reimbursement for your educational expenses.  According to the IRS, if you receive educational assistance benefits from your employer under an educational assistance program, you can exclude up to $5,250 of those benefits each year. This means your employer shouldn’t include those benefits with your wages, tips, and other compensation shown in box 1 of your Form W-2. This also means that you don’t have to include the benefits on your income tax return.  However, you can’t use any of the tax-free education expenses paid for by your employer as the basis for any other deduction or credit, including the American opportunity credit and lifetime learning credit.

 

There are some requirements to keep in mind.  For example, to qualify as an educational assistance program, the employer's plan must be written and must meet certain other requirements. Your employer can tell you whether there is a qualified program where you work.

 

Additionally, for your reimbursement to qualify as tax-free, the educational assistance you receive must be for expenses such as, tuition, fees and similar expenses, books, supplies, and equipment.  Educational assistance benefits don't include payments for expenses such as meals, lodging, or transportation.  In your case, you indicated the reimbursement you received was a tuition reimbursement, so it appears your reimbursement would be a qualified educational expense reimbursement.

 

Included below is a link to IRS Publication 970 that relates to educational benefits which you might find helpful. 

 

Tax Benefits for Education

 

@Croetzer97

Croetzer97
Returning Member

How to tell if Employer Provided Tuition Assistance is included in W-2.

There was no scholarship or grant involved a if i pay the taxes on it as if it was income would that qualify me to use the educational credit?

Croetzer97
Returning Member

How to tell if Employer Provided Tuition Assistance is included in W-2.

Also what about the tax loophole that @Hal_Al had previously talked about.

Hal_Al
Level 15

How to tell if Employer Provided Tuition Assistance is included in W-2.

Q. So if I had paid my tuition 2088 out of pocket. later that same year I had been reimbursed from my employer as a misc. reimbursement. Can I still use the loop hole? 

A. No.  You can only do that if you were reimbursed in a different year.

 

That answer assumes your are getting tax free reimbursement of under $5250.

If your reimbursement is being treated as taxable income, you don't need a loop hole.  After tax money is considered yours and you can claim the credit. 

 

Croetzer97
Returning Member

How to tell if Employer Provided Tuition Assistance is included in W-2.

The reimbursement was a tax free reimbursement of 2088. How I am understanding is that if I file that reimbursement as a 1099 making it taxable income I can claim the credit.

 

@Hal_Al 

Hal_Al
Level 15

How to tell if Employer Provided Tuition Assistance is included in W-2.

No, I'm of the opinion, you can't to that.  It's tax free reimbursement and you don't have the freedom to call it something else, if it's reimbursed in the same year.  You can't file a 1099  you didn't actually receive. 

Croetzer97
Returning Member

How to tell if Employer Provided Tuition Assistance is included in W-2.

Okay thanks. Doesn't really make sense to me. Whether you got in the same year or a different year wouldn't it all be taxed the same?

 

@Hal_Al 

Hal_Al
Level 15

How to tell if Employer Provided Tuition Assistance is included in W-2.

It's a technicality. In the different year scenario, you paid the tuition out of pocket and didn't get reimbursed by the end of the year. So, for that year you paid tuition with your money, so you get a deduction.  The following year you get reimbursed. The tax rules say reimbursement for something deducted in a previous year must be treated  as income.

bramirez5
Returning Member

How to tell if Employer Provided Tuition Assistance is included in W-2.

My employer provided Tuition assistance of $5,250 and my full tuition was $10,902. I am a little confused on the question regarding Other tax-free assistance. The question is Enter the amount received. Don't include amounts already listed on a W-2 or other tax form. Of course the $5,250 is on my W-2, but only as part of Gross Income and was not taxed. Do I then enter this amount of $5,250 in the Employer-Provided Assistance section?

Hal_Al
Level 15

How to tell if Employer Provided Tuition Assistance is included in W-2.

Q. Do I then enter this amount of $5,250 in the Employer-Provided Assistance section?

A. Yes.  

marpraf
New Member

How to tell if Employer Provided Tuition Assistance is included in W-2.

thanks for the previous info @Hal_Al.  seems like you are quite the expert in this topic!  if you could please advise on the following I would appreciate it!

in 2021 I received employer tuition reimbursement totaling $5,250 but my total tuition expense to the university was $8,467.68.  my year to date statement states "nontax tuition" as $5,250 but also $750 as "taxable tuition."  there is no amount listed in box 14 on my W2.  any suggestions on the amount I should claim in my "Employer Provided Assistance" in the educational tax credits / suggestions in general?

my education expenses totaled $1,036

thanks for your help!  looking forward to your response! 

Hal_Al
Level 15

How to tell if Employer Provided Tuition Assistance is included in W-2.

@marpraf 

Q. What amount I should claim in my "Employer Provided Assistance" in the educational tax credits?

A.  $5250.

 

 

Any portion of the employer assistance, that you pay tax on (the amount above $5250), is considered your money and can be used to claim the tuition credit.  For tax purposes, that amount is no longer "assistance", it's salary.

Photoles
New Member

How to tell if Employer Provided Tuition Assistance is included in W-2.

My employer will cover 5,250 direct pay not tax, but anything after that will be taxable and withheld on my check through an employer grant. It says it will take about 38,000 total to get my MBA. Can I get a credit any of it? Is it worth it to still go to school if I will have to pay taxes on the extra amount? Also, would I avoid paying less taxes if I choose the option for reimbursement for the money after 5,250 annual.

Hal_Al
Level 15

How to tell if Employer Provided Tuition Assistance is included in W-2.

Q. My employer will cover 5,250 direct pay not tax, but anything after that will be taxable. Can I get a credit any of it? 

A. Yes. Up to $10,000 of tuition, each year, paid with after tax money (whether you regular income or an "employer grant") is eligible for the Lifetime Learning Credit (LLC), which is 20% of the amount paid.  So, essentially you get most of that tax back.

 

Q. Is it worth it to still go to school if I will have to pay taxes on the extra amount?

A. Yes.

 

Q. Would I avoid paying less taxes if I choose the option for reimbursement for the money after 5,250 annual.

A. There is no option.  What you describe is the standard employer plan, per IRS rules (the first $5250 is tax free; anything over is taxable income. 

 

 

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