Q. How to I answer the question of "Did 'student' receive any of the following tax-free benefits last year?"
A. You answer that yes. Because the student received, thru you, that tuition assistance tax free, you may not count that much of the tuition for the education credit. TurboTax (TT) will reduce the box 1 amount on the 1098-T by the amount of tax free employer assistance, you enter, before calculating the tuition credit.
Q. Is this a tax free benefit?
A. It is for the purpose of that question, since you say you were not taxed.
Q. Is this really a tax free benefit?
A. It depends. Spouses and dependents are not allowed tax free benefits under the usual section 127 employee educational assistance programs. Your employer may have establish some sort of scholarship foundation. Universities are allowed to provide tax free assistance to employees and their family members.
You should verify that the tuition amount was not included as income, on your W-2. If it was, you answer that question No. If it wasn't tax free, you may use that amount when calculating the tuition credit.
Also verify that the employer assistance was not already reported in box 5 of the 1098-T, if your employer sent the money directly to the school.
