Tuition reimbursement over $5250

[bgerry]

Here's my situation:

$8602 - I paid this in tuition for 2023. This is listed in box 1 on my 1098-T for 2023.

$10796 - Amount that my employer reimbursed me in 2023. This includes $8602, plus $2194 (for tuition in 2022, but was paid to me in 2023).

Of the $10796:

$5250 - Reimbursed by employer and not included as income on W2.

$5546 - Included as income in box 1 of my W-2 and was taxed.

1. Am I supposed to be taxed on tuition reimbursement over $5250? Is there a way that I'm "paid back" for being taxed on this?

2. What should I enter under "Tuition"when prompted to enter the info from the 1098-T? Do I enter the full value of $8602 or do I not enter it at all? I technically did not pay for any tuition on my own (because all $8602 was reimbursed). 

3. Under "Scholarships/Grants (for all schools)" > "Let us know if you got a scholarship, grant or any of these other types of aid" > I said YES for this because one of the choices is "employer-provided assistance". Is this correct?

4. It then says "Enter the amount you received. Don't include amounts already listed on a W-2 or other tax form." In the "Employer-Provided Assistance" box, I put $5250 (because the remaining $5546 is including in my income). Is this correct?

5. Is there anything else I need to be considering or that I missed in entering these in TurboTax?

[AmyC · Accepted solution]

1. Yes, the amount over $5250 is on your w2 in box 1 as taxable income. See Educational assistance programs can be used to help pay which states: By law, tax-free benefits under an educational assistance program are limited to $5,250 per employee per year. Normally, assistance provided above that level is taxable as wages.

1. b. Taxable income is taxable income. Paying a little tax versus paying all of that money to the school, worth it. Plus, the credits may eliminate the tax.

2. Enter the 1098-T like it shows. 

3. Yes

4. Yes

5.  Nope

[Hal_Al]

Q.  Am I supposed to be taxed on tuition reimbursement over $5250? 

A. Yes. 

Q.  Is there a way that I'm "paid back" for being taxed on this?

A. Yes, you may use the $5546 to calculate (claim)  tuition credits, $3352 (8602 - 5250 = 3352) on your 2023  and $2194 on your 2022 return.  You can do that because that part of the reimbursement was not tax free. That is, you paid $5546 of tuition with YOUR after tax money.