Q. Will he receive a 1098-T from the college since his employer sent payment?
A. Yes, most likely. That is, the school should still send out a 1098-T, in this situation. But, the schools don't always do things the right way.
Q. Will he be able to write the cost of tuition off on his taxes?
A. Yes, since he has paid the tuition with what is his own after tax money. That is, since the tuition was not paid with tax free employer assistance, he can use the amount paid to claim the tuition credit.
Q. Need to know before the next semester if this is the best way for them to be doing this or if my son should just be paying the college directly?
A. If the school does the 1098-T correctly, it shouldn't matter. But, some schools mistakenly show employer assistance in box 5 of the 1098-T, making it appear as if the tuition was paid by tax free scholarship. So, simple answer is: your son should pay the college directly.
This answer has been verified for accuracy by an Intuit expert employee
