If my place of employment paid my tuition by paying my grad school directly (did not need reimbursement), was it correct for me to not include that in my tax filings?

[nlanglois7]

To my recollection, this did not show up on my W2 and I only received a 1098-T form each year showing what the school received for payment.  The direct tuition payments paid by work were around $11K/year.

[Hal_Al]

Check your W-2 and pay stubs carefully.   By law, your employer* can only give you $5250 maximum, tax free, per year.  Any amount over that is taxable income and should be reported on your W-2 as income. The amount should be included in box 1.  There may or may not be aa additional entry, on your W-2  (box 14 usually).

So, if tuition was $11,000, and totally paid by the employer, then you can claim a tuition credit based on the amount that was paid by "your" after tax money (11,000- 5250= $5750). 

* The rules are different if your employer is the school and the "employer assistance" is in the form of tuition remission.  Then, it is all tax free and you can not claim a tuition credit. 

Edited 10-5-21:  If your employer is calling this on the job training (see additional reply below), then they did not need to include any of it on your W-2.

[nlanglois7]

I just checked W2.  No amount of the tuition was included on W2 by my employer.  It would also be important to note that none of this tuition involved reimbursement to me.  It was paid DIRECTLY to the school from my employer as a partnership program through work where the courses were preselected and I had no say in electives for the grad school program.  I guess you could say that all coursework was totally to the benefit of my employer that sponsored this grad school program.  Also, my employer was not the school.

[Hal_Al]

The fact that the school was paid directly, rather that you being reimbursed, does not change the answer above. That's fairly common. However,  your employer is allowed to pay third parties (a college in this case) for job training, and that is a business expense to them.  Apparently, your employer is calling it that, by selecting the courses and  not including any of  the money paid, on your W-2.  The fact that you also end up with a degree (the courses were not TOTALLY for the benefit of the employer), probably does not change the job/business classification of the courses.  Whether it does or not is between them and the IRS and not your concern (most likely). 

Therefore, yes,  it was correct for you to not include the 1098-T in your  tax filings.  You cannot claim a tuition credit, since you didn't pay any tuition.  If there was an amount in box 5 scholarships  (there shouldn't have been), you do not need to report that either, since it went for job related education. 

[nlanglois7]

Yeah, this was a unique masters-degree program where I had to sign a contract.  If I do not keep my part of the contract, I would ultimately have to pay my employer back (not the school).  Therefore, this would be similar to a business expense which employees don’t have to pay income tax as the employer takes the tax benefit.  I feel like I also remember being told at one point that I would not be able to claim tax credit for this as the tuition expense was already paid up front.

In a worst-case scenario, the large company I work for would have included any tuition that I would have owed income tax on the W2 and that would have automatically been included in my tax filings anyway and I would have just failed to claim tax credit on it.  Now that school is over and those few years of filing are past, I guess I have nothing to worry about as state and IRS approved everything and I filed consistently at the time.