My employee tuition assistance program paid for my 2016 classes in 2017. Now they are taking out $1000 of imputed income from my check every two weeks. Can I deduct?

[zarboti]

Normally I would have been taxed on the amount over $5,250 for 2016 (2750) and another 2750 for 2017 but instead I am getting taxed on the amount over $5,250 of 16,000 total which is $10,750.  They are taking more than half of my check for the next 8 checks.  Do I get any of this back at the end of the year?

[Hal_Al]

No. Your company is doing it right. Although they had the option of reimbursing you in 2016, the fact that they choose to reimburse you in 2017 limits them to the $5250 ANNUAL limit on tax free reimbursement.

If you did not claim the Tuition credit, on your 2016 return, you may want to file an amended return to do so, since you were effectively reimbursed with after tax money