Q. Where is employer paid tuition recorded on a student's 1098-T?
A. No where on the 1098-T.
Q. Is an employer's third-party payment made directly to the school reportable in either box 1 or box 5 of the 1098-T?
A. No. Or, more accurately, usually no. As you have heard, some schools mistakenly do so. If your school does, you'll have to make an adjustment when you enter the 1099-T. The total tuition is reported in box 1 of the 1098-T, regardless of how it was paid. Only actual scholarships amounts are reported in box 5, not employer tuition assistance.
Q. Does it change if the school and employer have an agreement/cohort established?
A. Probably not. Depending on the wording of the agreement. Usually an employer's direct payment to the school is simply a credit to the student's account. It's still up to the student to figure out the affect on his tax reporting. You cannot claim a credit for the tax free portion of tuition paid by employer assistance,
Q. Is the reporting affected by the max amount of $5250 for employer tuition benefit?
A. Yes.
By law your employer can only give you $5250 maximum tuition assistance, tax free. If your tuition was less than that, and you employer reimbursed it all; it’s safe to assume it does not need to be reported. 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 and you do not need to enter any additional income on your tax return.
But, since you have paid tax on that part, it is considered your after tax money and that amount can be used to claim the tuition credit. For tax purposes, it’s not really reimbursement, it’s your money.
