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CRL2
Returning Member

Employer Tuition Reimbursement

Hello,

I have a few part question regarding employer tuition reimbursement, W-2 and my tax return:

1. If my employer tuition reimbursement is <=$5,250 I assume it will not show up in box 1 of my W-2?

2.  If my employer tuition reimbursement is >$5,250, will only the difference between the actual and $5,250 show up in box 1 of my W-2?  Will the employer then withhold taxes out of this difference?

3. On my tax return, I assume I need to report the 1098T that I get from the college?  What form is that?

a. Do I report exactly what I paid from the 1098T, or only the difference from what I paid and the $5,250 (if reimbursement was >$5,250)

b. Do I report exactly what I paid from the 1098T, if tuition reimbursement was<=$5,250?  Or do I not report the 1098T at all?

Thanks in advance.

 

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5 Replies

Employer Tuition Reimbursement

Only an amount of education reimbursement greater than $5,250 will be included with wages in Box 1 and tax withheld accordingly. When claiming education credit only your unreimbursed expenses should be reported. 

CRL2
Returning Member

Employer Tuition Reimbursement

Hi,

 

Thank you. So to put an example to this.  My tuition costs and I paid to the college $13,250.  My employer pays 100% of the tuition.  $5,250 is exempt, so my understanding is that my W-2 (in box 1) should show an additional $8,000 of income?  Correct?  And I assume that no taxes have been taken out when I get reimbursed (not sure) of this yet?  Correct.

 

Then for my yearly return, my 1098T for says that I paid the college $13,250.  Instead of reporting the full $13,250, I should only report $8,000? or should I report 0$ since the employer paid everything?

 

Thanks again.

Employer Tuition Reimbursement

Correct in all of your assumptions. You can use the $8,000 as education expenses for your education credit. 

Hal_Al
Level 15

Employer Tuition Reimbursement

Q.  If my employer tuition reimbursement is <=$5,250 I assume it will not show up in box 1 of my W-2?

A. Yes, that is correct. It may show up in box 14, but that's only informational and does not affect your tax return. 

 

Q.  If my employer tuition reimbursement is >$5,250, will only the difference between the actual and $5,250 show up in box 1 of my W-2? 

A.  Yes.

 

Q. Will the employer then withhold taxes out of this difference?

A. Yes.  For tax purposes, it is essentially additional income.

 

Q. On my tax return, I assume I need to report the 1098T that I get from the college?  

A. The 1098-T is only an informational document. The numbers on it are not required to be entered onto your tax return. However receipt of a 1098-T frequently means you are either eligible for a tuition credit.  If you claim the tuition credit, you do need to report that you got a 1098-T (the TurboTax interview will handle this).

 

Q.  If I claim a tuition credit, what form do I claim it on,  on my tax return?

A.  Form 8863. TurboTax (TT) will automatically generate that form when you enter the 1098-T and follow the interview.  The interview includes a question about employer assistance. 

 

Q. Do I report exactly what I paid from the 1098T, or only the difference from what I paid and the $5,250 (if reimbursement was >$5,250)?

A.  You "report" (on form 8863) only the difference.  TT handles this. 

Q.  Do I report exactly what I paid from the 1098T, if tuition reimbursement was<=$5,250?  Or do I not report the 1098T at all?

A. You can just not enter the 1098-T, in TT, since you know you are not eligible for a tuition credit.

 

Q.  So to put an example to this.  My tuition costs and I paid to the college $13,250.  My employer pays 100% of the tuition.  $5,250 is exempt, so my understanding is that my W-2 (in box 1) should show an additional $8,000 of income? 

A. Correct.

 

Q.  And I assume that no taxes have been taken out when I get reimbursed (not sure) of this yet? 

A. No.  Employers usually (almost always) withhold income tax, on the difference.  

 

Q. Then for my yearly return, my 1098T for says that I paid the college $13,250.  Instead of reporting the full $13,250, I should only report $8,000? or should I report 0$ since the employer paid everything?

A. You report $8000 of net tuition paid, on form 8863, for the education credit.  In TT, enter the 1098-T with $13,250 in box 1 and enter $5250 (not $13250) when asked about employer assistance .

CRL2
Returning Member

Employer Tuition Reimbursement

Thank you!!

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