Working Fringe Benefit for Excess Tuition Assistance

zalera · Jan 22, 2021 11:38:51 PM

My employer is a university who offers employees tuition coverage for attending courses and enrolling in degree seeking programs. I was reading the Education section on Working Fringe Benefits and saw that it indicated that employees who were pursuing education that would increase their abilities in their current role did not need to report the excess tuition payments for themselves that were over the $5250 limit. I wasn't aware of this special rule for employee who are pursuing education relevant to their current job roles. Because of that, my employer has spread the excess tuition payments across a few months of my paychecks and counted it as additional taxable income which has the effect of taking more money out of my paycheck and then withholding too much tax for the government. I have asked my employer to issue me a corrected W-2 and I'm not sure if they will do it; the law says the employer has the "option" to not report excess tuition payments as income on the employee's W-2 but doesn't require them to honor this, which seems odd. So, I'm not sure if I'll received a corrected W-2 or excess tax withholding refund from my employer. However, I read that I can basically change my W-2 to correct it to not count the excess over $5250 as income. When I do this, TurboTax says my employer has withheld too much tax from my paychecks and to contact them for a refund and a corrected W-2. My questions to the community is: <OL><LI>Assuming my employer doesn't follow through with refunding my excess tax withholdings in light of the working fringe benefit I am eligible for, how can I accurately remove the excess income when I enter my W-2 into TurboTax and make a note of the adjustment for the IRS?</LI><LI>And then, how can I file the form that will request a refund from the IRS for excess withholding my employer already did?</LI></OL>

Despite buhockey21 using the term "similar situation", I suspect, as KrisD15 did, that he's really asking about the more common situation: he got $5250 of tax free tuition assistance and some additional assistance that was included as taxable income on his W-2.

His question is can he use the "excess" assistance to claim a tuition credit or deduction. The answer is yes. Because he has paid tax on that money, it is treated as "his" money not the employer's money.

He may actually come out ahead. The LLC is worth 20% of the amount claimed.