Can you enter 1098-T information if the tuition was reimbursed?

[awalters14]

My employer reimburses me for my tuition expenses for school. I am itemizing my return, and it is asking me for information on the 1098-T, which I entered because I have the form. However, it gave me credit for entering that information. There does not seem to be a way to show that my work reimburses me for tuition (even though I paid upfront and paid fees, books, etc., out of pocket). I am not sure that I should be getting the credit since my employer reimburses me for a big chunk of that expense. Can someone help clarify if I should be entering this information ... or what I can do to make sure I am showing the employer reimbursement piece.

[RaifH]

Yes, you still want to enter the 1098-T information. You also want to enter your employer reimbursement, which will reduce the amount of education credit that you are receiving. You only receive credit for tuition you pay for out-of-pocket or through loans. As you suspected, you do not get credit for scholarships, grants, or employer assistance.

To enter the 1098-T:

1. Open or continue your return
2. Select Search and search for 1098t 
3. Select the Jump to link in the search results
4. On the Do you want to enter your higher education expenses? screen, answer Yes
5. Answer Yes to Did you get a 1098-T for the year? and Continue
6. On the next screen, you can choose how you'd like to add your 1098-T. You can upload a digital copy from your computer or type it in yourself. Select which option you'd like and Continue
7. After entering the information from the 1098-T you will navigate through several more questions. Eventually you will get to a screen that asks Did Jack Receive a Scholarship or Grant in 2021? Note that TurboTax also indicates to include other types of aid, including employer-provided assistance. Answer Yes and then enter the amount of Employer-Provided Assistance received on the appropriate line. 

After it all shakes out, you may still be eligible for an education credit. It just may be significantly lower than it was before you entered the employer reimbursement. 

[Hal_Al · Accepted solution]

It depends. If your employer reimbursed you with TAX FREE reimbursement you cannot claim the tuition credit. 

By law your employer can only give you $5250 maximum, tax free. If your tuition and other costs was less than that, and you employer reimbursed it all, you do not even need to enter your 1098-T. You have nothing to claim. 

 If you got more than $5250, the amount above $5250 is usually already included in box 1 of  your w-2.  Since you have essentially paid tax on that part, it  is considered your after tax money and that amount can be used  to claim the tuition credit.  As described at the other reply, the TurboTax interview can handle this situation.  Answer the questions carefully. 

The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. 

[awalters14]

Thank you. Yes, it is pre-tax reimbursement. They reimburse the tuition, and it is not taxed. Thank you for the additional information. This is helpful. 

[BG02]

My employer reimbursed me for most but not all of my tuition expenses. Some was tax free and some was taxed. How do I enter the taxed reimbursement as well as the non tax? Do I enter the 1098-T

[Hal_Al]

Q. How do I enter the taxed reimbursement?

A. It is already (usually) included in box 1 of your W-2 and is not entered anywhere else. It's essentially "your money" and not tuition assistance, for tax reporting purposes. 

Q. Do I enter the 1098-T?

A. Yes. Since the taxed part is essentially you paying tuition, you are allowed to claim the tuition credit, based on the taxed part. 

Q.  How do I enter the non tax part?

A.  After entering the 1098-T, follow the interview. You will eventually be asked about employer assistance. Enter only the untaxed part (usually $5250). 

If your employer paid the money directly to the school, the school may have, erroneously, entered the money in box 5 of the 1098-T.  Verify if that happened, if so don't duplicate the entry, If the school also included the taxed part, you will need to change the box 5 amount, when you enter it in TurboTax. 

[Cal_AL]

Hi, i submitted a reimbursement with my job for 1 semester. we only get credit for classes after 6 months working for the employer. so for 1 semesters i paid for myself. how do i submit the information in this situation. 

[Hal_Al]

If you did not get reimbursed at all, then you can count the tuition you paid to claim a tuition credit.

If you paid for the first semester and get reimbursed later (even in the following year), then you can not claim a tuition credit.  Subject to the $5250 limit, discussed above.

[Cal_AL]

For the spring and fall semester I did not get reimbursed. My job paid for only the summer semester.  So even if I only got reimbursed the summer, I can't modify the 1098?

[Hal_Al]

Since you did not get reimbursed for the spring and fall semester, you can claim  the spring and fall semester tuition for the tax credit.

Q. Can I  modify the 1098-T?

A. Yes. The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. You claim the tuition credit based on your own financial records, not the 1098-T.  Just change the numbers to what they should be.  What you enter is not sent to the IRS, only the calculation results. 

That said, it doesn't make sense that they would reimburse the summer session and not the fall.  If you are expecting to be reimbursed for the fall, in 2023, you do not count the fall tuition for the tuition credit. 

[Cal_AL]

They haven't reimbursed me the fall semester because I didn't put in the reimbursement yet because grades have to be finalized which took until the 20th of December. I just haven't submitted it yet. I'm planning to submit the fall for tax fee credit. the only thing I'm submitting for the 1098 is the spring. If they doesn't make since then I'd might as well don't.

[Hal_Al]

@Cal_AL  said "the only thing I'm submitting for the 1098 is the spring".

That is the correct thing to do. 

[Subydayo]

My work pays for my tuition, and everything after the $5,250 was considered and entered as Federally taxable income, box 1 on my W-2.

The education I receive qualifies as working condition fringe benefit, so it should not be considered taxable income. The 6 courses qualify because they are training me in my field, it is not to meet the minimum requirements of my position, and the education is not preparing me for a job that is in a new field. How do I file now that the W-2 is essentially incorrect? I've asked my employer to correct my W-2 but they said:

"We would not issue a corrected w-2 as the taxes that were collected are correct since CMU will withhold taxes regardless of if you decide to pursue looking into this option while filing taxes. We do not have any tax advice or recommendations on who may be able to assist you with applying for an exemption while filing your taxes but I can confirm that everything on the CMU side would be reported as is with no changes. I apologize that we are not able to be of more assistance when it comes to the taxation exemptions but since we are not tax experts, there is little information we are able to provide on this topic. 

Generally, employer-provided graduate tuition benefits that exceed $5,250 in a calendar year are subject to federal withholding. Tuition benefits may be tax-free if they represent a working condition fringe benefit under IRS regulations. While Carnegie Mellon University is required to withhold federal taxes on graduate tuition benefits that exceed $5,250 in a calendar year, employees may consult with their tax advisor to determine if they qualify for any exemptions when filing their tax return."

Thanks!

[Hal_Al]

Q. How do I file now that the W-2 is essentially incorrect?

A. It is not incorrect.  The income is taxable. 

But, since you have paid tax on that amount, you may use that amount to calculate a tuition credit.

Q. The education I receive qualifies as working condition fringe benefit, so shouldn't it be considered non taxable?

A. Maybe. But your employer must treat it as such. That must be handled by the employer, prior to issuing your W-2.  When it is treated as  a working condition fringe benefit, no income is added to your W-2, and your employer takes a business deduction.   There is no way for you to declare it as non taxable income, when you file your tax return. 

[Subydayo]

How do I claim that amount for the tax credit? Does my 1098-T need to say that amount? 

I guess I'm hung up on why it is up to my employer to decide if it is a non-taxable working condition fringe benefit. I meet all stipulations in the code.

The university also said to reach out about exploring it as a working condition fringe benefit. I've done that and the IRS told me to request a corrected 1098-t and/or W-2.