Tuition reimbursement question

[S1993]

For the last several years I've been reimbursed for tuition in both June when the Spring semester ends and in December when the fall session ends. As such, I never do anything with the tax form provided by the school at year end nor do I report anything on the education section of my taxes. It's essentially set up where I pay the bill at the beginning of the semester myself and then at the end of the semester the equivalent amount of  money gets returned to my checking account via an expense report. However, this year is a bit different. I was not informed of a new cut-off for the 2021 cycle and missed the deadline for my fall semester submission. As a result, I've been told that my expense report will go through but get applied to 2022 and arrive sometime in January. So not only will I be pressed for cash between now and the upcoming tuition due date, but I will now have 3 submissions in 2022 which will put me way over the maximum reimbursement limit. 

So the question is, am I able to claim the 2021 tuition paid on my upcoming tax return or not? 

[Hal_Al · Accepted solution]

Q. So the question is, am I able to claim the 2021 tuition paid on my upcoming tax return? 

A.  Simple answer: yes.  But, you may have a choice (actually a tax loop hole). You can claim nothing on your 2021 tax return, as you have in the past, since it will be reimbursed in 2022. Or, you can claim a tuition credit, because you are out-of-pocket. But then, you may have to report the reimbursement from your employer as taxable income on your 2022 tax return.

That assumes your employer will treat the 2021 reimbursement (in 2022) as tax free, on your 2022 W-2.  If they will treat is as taxable, in 2022, then you should, for sure, claim the tax credit on your 2021 return.   You  said  "3 submissions in 2022 which will put me way over the maximum reimbursement limit".  Does that mean you won't get full reimbursement or only that some of it will be taxable?

Bottom line: if you pay tax on the reimbursement, it's YOUR money and you can claim the tax credit.  If you get tax free reimbursement, you cannot claim the credit.

As to what you've done in the past: you have done it correctly if the amount were less than $5250 per year ("the limit") and your employer did not report it as taxable income on your W-2.